six rules of brand revitalization: learn the most common branding mistakes and how to avoid them

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Praise from the First Edition of Six Rules for Brand Revitalization

“The six rules for brand revitalization have been validated in a number of key turnarounds. They are indispensable in today’s recessionary times. A must read for every manager who confronts declining brand sales and profitability.”

—Jerry Wind, The Lauder Professor and Professor of Marketing,The Wharton School, University of Pennsylvania

“The automotive retail industry has been trying hard to change more than a half century of negative image caused by some tradition of customer-unfriendly practices and unfavorable media coverage. We have combined Larry’s branding concept and his six rules with our company’s customer-first heritage and are making significant progress.”

—Shau-Wai Lam, Chairman and CEO,DCH Auto Group

“Light tells the story of the McDonald’s revitalization in a way that makes it seem like you were there. With his depth of experience and insight, he extracts principles that are applicable in any situation. If your brand is stagnating or in decline, this is a must read.”

—David J. Reibstein, The William S. Woodside Professor andProfessor of Marketing, The Wharton School University of Pennsylvania

“Larry and Joan have laid out a great set of guiding principles for any business executive—whether they are revitalizing a brand or making sure it stays relevant.”

—Russ Smyth, CEO, H&R Block;former President, McDonald’s Europe

“Brand revitalization—impossible to accomplish without the Executive Suite’s overriding desire for a strong/clear brand platform and execution of the brand that recognizes the company’s potential for risk and rewards.

“Management must have the ability to not only possess the vision but allow and encourage others to express the brand through many of the touch-points to customers, employees, vendors, and the media. It’s fundamentally important to realize that although management should be the steward (caretaker) of the brand, it’s not the sole owner.”

—Steve Bagby, President,BAGBY ideas >360°, Chicago, Illinois

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“The notion that a strong brand is the difference between business success and failure is truer today than ever before. This book not only offers a unique insight into how the McDonald’s brand was successfully revitalized but, even more importantly, it describes six very useful rules for how to revitalize any brand.”

—Hans Straberg, President and CEO,Electrolux AB, Sweden

“This book is a must-read for anyone working with a brand, be it weak or strong, new or mature. The dynamic duo of Larry Light and Joan Kiddon share their keen insights into brand thinking and execution in a real-life example in which they turned around one of the world’s best brands. Larry and Joan provide a good thought process to ensure your brands perform, grow, and add value.”—Lars G. Johansson, Senior Vice President, Communications and Branding,

Electrolux AB, Sweden

“The principles described by Larry Light and Joan Kiddon are the basis for the approach to brand management that has been an essential element of building brands at 3M. Six Rules for Brand Revitalization captures the vital elements for building and revitalizing brands and is a must read for anyone that wants to improve their business.”

—Dean Adams, former director,Corporate Brand Management, 3M

“This is a story of how true commitment to a brand combined with strong leadership contributes to brand development. It demonstrates that big brands can be revitalized. With Larry and Joan’s clear explanations, we learn six simple rules about brand management. However, we should never forget not to just learn them by heart but to use our heart in making brand decisions. Because in the end, it is the human factor that matters.”

—Maria Campillo, Brand Consultant,Grupo Sanborns, S.A. de C.V, Mexico

“Joan Kiddon and Larry Light synthesize their key concepts and principles into what can be considered the missing masterpiece in the brand management literature. Six Rules for Brand Revitalization features the McDonald’s turnaround case and is based on Larry’s 360° experiences as a leading consultant, executive, advertiser, and professor, linking all of the most important marketing battlegrounds.”

—Uriel Alvarado, Regional Marketing Manager, Latin America,Saxo Bank, Denmark

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“Having worked with Larry and Joan while I headed M&M/Mars, I am delighted they have finally written a book encapsulating their principles and processes. This book demonstrates the fundamental truth that brand building begins with understanding changing consumer wants. Creating, building, maintaining, and strengthening consumer relevance is the key to brand success. This book is a gift for those who believe in brands and know that marketing is bigger than just advertising. This is a delightful read…I could not put it down.”

—Howard Walker, former President,M&M/Mars

“Over the past two years, Larry has been a great partner in transforming our organization to a more customer-centric one. His insights on how to align employees’ motivations and capabilities to marketing strategy will be invaluable to any senior management team embarking on a major turnaround initiative or embarking on a customer-driven growth journey.”

—Vincenzo Picone, Global Chief Marketing Officer,GE Capital

“This is an emotional, dramatic, and true story that captures how a handful of aggressive, fiercely passionate leaders were able to turn the gigantic global ship of McDonald’s around, and set her on the brilliant course she sails so smoothly today. It was truly miraculous. I know, I was there.”

—Cheryl Berman, Chairman Emeritus,Leo Burnett USA

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Six Rules of Brand Revitalization

Second Edition

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Six Rules of Brand Revitalization

Second Edition

Learn the Most Common Branding Mistakes and How to Avoid Them

Larry Light Joan Kiddon

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Publisher: Paul Boger Editor-in-Chief/Acquisitions Editor: Amy Neidlinger Editorial Assistant: Olivia Basegio Cover Designer: Alan Clements Managing Editor: Kristy Hart Senior Project Editor: Lori Lyons Copy Editor: Gill Editorial Services Proofreader: Debbie Williams Indexer: Erika Millen Compositor: Nonie Ratcliff Manufacturing Buyer: Dan Uhrig

© 2016 by Pearson Education, Inc. Old Tappan, New Jersey 07675

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All rights reserved. Printed in the United States of America. This publication is protected by copyright, and permission must be obtained from the publisher prior to any prohibited repro-duction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. For information regarding permissions, request forms, and the appropriate contacts within the Pearson Education Global Rights & Permissions Department, please visit www.pearsoned.com/permissions/.

First Printing February 2016

ISBN-10: 0-13-450783-5 ISBN-13: 978-0-13-450783-5

Pearson Education LTD. Pearson Education Australia PTY, Limited Pearson Education Singapore, Pte. Ltd. Pearson Education Asia, Ltd. Pearson Education Canada, Ltd. Pearson Educación de Mexico, S.A. de C.V. Pearson Education—Japan Pearson Education Malaysia, Pte. Ltd.

Library of Congress Control Number: 2015959178

http://www.pearsoned.com/permissions/

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Contents

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Part I The Twelve Tendencies for Trouble. . . . . . . . . . .7

Chapter 1 Tendency 1: The Arrogance of (Great) Success . . . . . . . .11

Chapter 2 Tendency 2: The Comfort of Complacency. . . . . . . . . . . .17

Chapter 3 Tendency 3: The Building of Organizational Barriers and Bureaucratic Processes . . . . . . . . . . . . . . . . . . . . . . . .23

Chapter 4 Tendency 4: The Focus on Analyst Satisfaction Rather Than on Customer Satisfaction . . . . . . . . . . . . . . . . . . . . .27

Chapter 5 Tendency 5: The Belief That What Worked Yesterday Will Work Today . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

Chapter 6 Tendency 6: The Failure to Innovate. . . . . . . . . . . . . . . . .41

Chapter 7 Tendency 7: The Lack of Focus on the Core Customer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

Chapter 8 Tendency 8: The Backtracking to Basics . . . . . . . . . . . . . .51

Chapter 9 Tendency 9: The Loss of Relevance. . . . . . . . . . . . . . . . . .55

Chapter 10 Tendency 10: The Lack of a Coherent Plan to Win . . . . .63

Chapter 11 Tendency 11: The Lack of a Balanced Brand-Business Scorecard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67

Chapter 12 Tendency 12: The Disregard for the Changing World . . .71

Chapter 13 Break the LOCK on Brand Troubles . . . . . . . . . . . . . . . . .75

Part II The Six Rules for Brand Revitalization… Revisited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81

Chapter 14 Rule 1: Refocus the Organization. . . . . . . . . . . . . . . . . . . .83

Chapter 15 Rule 2: Restore Brand Relevance. . . . . . . . . . . . . . . . . . . .91

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x SIX RULES OF BRAND REVITALIZATION, SECOND EDITION

Chapter 16 Rule 3: Reinvent the Brand Experience . . . . . . . . . . . . .107

Chapter 17 Rule 4: Reinforce a Results Culture. . . . . . . . . . . . . . . . .137

Chapter 18 Rule 5: Rebuild Brand Trust . . . . . . . . . . . . . . . . . . . . . .155

Chapter 19 Rule 6: Realize Global Alignment . . . . . . . . . . . . . . . . . .173

Part III The Twelve Truths for Staying Out of Trouble. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .185

Chapter 20 Truth 1: Recognize That Culture Matters: Overcome Cultural Resistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .187

Chapter 21 Truth 2: Institutionalize Change . . . . . . . . . . . . . . . . . . .191

Chapter 22 Truth 3: Define a Clear Strategy for Enduring Profitable Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .195

Chapter 23 Truth 4: Break Down Silos . . . . . . . . . . . . . . . . . . . . . . . .197

Chapter 24 Truth 5: Reinforce Authenticity . . . . . . . . . . . . . . . . . . . .199

Chapter 25 Truth 6: Make Demographics Matter . . . . . . . . . . . . . . .203

Chapter 26 Truth 7: Act Like a Leader . . . . . . . . . . . . . . . . . . . . . . . .207

Chapter 27 Truth 8: Stay Relevant . . . . . . . . . . . . . . . . . . . . . . . . . . .211

Chapter 28 Truth 9: Move from Living off Current Positive Momentum to Creating Ongoing Positive Momentum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .215

Chapter 29 Truth 10: Institute Clear Accountability . . . . . . . . . . . . .217

Chapter 30 Truth 11: Change the Reward System . . . . . . . . . . . . . . .219

Chapter 31 Truth 12: Measure Results . . . . . . . . . . . . . . . . . . . . . . . .223

Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .227

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .229

McDonald’s Case History is available online at www.ftpress.com/sixrules

http://www.ftpress.com/sixrules

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Acknowledgments

Over the decades, we have met and conducted business with many wonderful people. Each in their own way contributed to our under-standing of managing brands globally and locally with Leadership Marketing, Operational Excellence, and Financial Discipline. The world has changed remarkably since we began our business careers, but the friendship, learning, love, and yes, fun, has been enduring. It is impossible to do what we have done and accomplish what we have set out to accomplish without the support of these terrific individu-als. Our collective thanks to CEOs such as Carlos Ghosn, Forrest and John Mars, Jim Cantalupo, Charlie Bell, Richard Solomons, Steve Ells, Steve Kaufman, Maurice Saatchi, and various leading marketers including Micky Pant, Dan Yagoda, Terry Rogers, Bradley Gale, Jerry Hirshberg, Ken Warwick, Howard Walker, Claude-Elliot Hermann, and Yasmin Diamond. And, as always, to our families: Joyce, Laura, Michelle and Naomi, and Chloé and Olivia for their encouragement and ever-lasting support. We also recognize and appreciate the con-tinuing support of those at Pearson who have provided us with helpful direction and needed editing.

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About the Authors

Larry Light is the Chairman and CEO of Arcature. Larry was Global CMO of McDonald’s from 2002 to 2005. More recently, as the interim Global Chief Brands Officer of IHG from 2011 to 2013, Larry led global organizational and marketing process change to increase the effectiveness of IHG’s global and local marketing. Light was formerly the Executive Vice President at BBDO and was Chairman and CEO of the international division of Bates Worldwide and was also a mem-ber of the Bates’ Board of Directors. In 2004, BrandWeek selected Larry as one of the top ten marketers of the year and McDonald’s won “Marketer of the Year” from Advertising Age . In its report on Best Marketers of the Decade, AdWeek reported that “Larry Light, who turned around McDonald’s as CMO from 2002 to 2005 finished sec-ond to Steve Jobs.” Summarizing the top ten ideas of the decade, Ad Age selected Larry Light’s “Brand Journalism” as “arguably the most realistic description of marketing today—perhaps ever.” In 2013, in partnership with the Association of National Advertisers, the Interna-tionalist recognized Larry among 100 marketing leaders from around the world who are consistently moving business forward.

Joan Kiddon is President and COO of Arcature. Joan began her career in 1976 as a market researcher at BBDO Worldwide in New York. In 1978, she moved into Account Management. She was the head of marketing and market research for BBDO West, Los Ange-les, from 1980 until 1986. In 1990, she joined Arcature. Joan con-sulted to McDonald’s during its brand turnaround from 2002 until 2005. Kiddon with Light consulted to IHG from 2010 to 2014. Joan Kiddon is the co-author of Six Rules for Brand Revitalization: Learn How Companies Like McDonald’s Can Re-Energize Their Brands and New Brand Leadership: Managing at the Intersection of Global-ization, Localization, and Personalization.

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Preface

In 2009, we published the first edition of our book based on our experience participating in a variety of turnaround situations, includ-ing the heralded revitalization of McDonald’s from 2002 to 2005. We provided a set of Six Rules for successful, profitable brand revitaliza-tion. Over the past six years, a lot has changed in the marketing world. Among these influences are changing demographics; increased com-petitive pressure; more informed, more skeptical customers; changing values; increased impact of the Internet; increased influence of social media and mobile marketing; and so on. Yet, even in the context of these significant changes, the Six Rules remain as relevant today as they were in 2005 when we left McDonald’s. The Six Rules for Brand Revitalization are foundational and enduring.

Since 2009, we have seen the decline of some big and beloved brands, such as Kraft, Campbell’s, J. Crew, The Gap, BlackBerry, and United (Continental). And we have observed the unfortunate return to bad habits at McDonald’s, resulting in two years of sagging sales due to increased operational complexity, long wait times, and high prices with inconsistent and unfocused strategies and market-ing. Finally there is now some indication that the corner is being turned. Some commentators have attributed the McDonald’s chal-lenges to the decline of fast food. This is incorrect. While McDonald’s lost momentum, Burger King, Wendy’s, Popeye’s, Jack in the Box, Chick-fil-A, and other fast food brands are growing. Additionally, we looked at other brands that successfully turned around, such as Apple and Lego. Why do some brands, like Campbell’s, succeed in turning around and then re-enter a period of decline? How can brands avoid getting into trouble once they are turned around?

With our decades of involvement on the agency side, the client side, and as consultants, we look at how big brands fall into trouble and how the Six Rules not only still work today, but also are more pertinent than ever in revitalizing troubled brands. Additionally, we look at ways in which brands can stay out of trouble once they are rejuvenated and turned around. This is how we structure this book. It is a how-to book for the enduring, profitable growth of brands:

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xiv SIX RULES OF BRAND REVITALIZATION, SECOND EDITION

• How big brands get into trouble

• How to revitalize brands

• How brands can avoid getting into trouble again

To illustrate our thinking, we offer many examples throughout the book. In addition, we provide a detailed case history of McDonald’s online at www.ftpress.com/sixrules. Since 2006, McDonald’s has suf-fered a case of severe mismanagement and neglect of core principles following the positive turnaround created in 2003–2005. We pieced together a compelling story of publicly available information describ-ing how McDonald’s found itself in trouble again. And we report on some of the initiatives that seem to be helping now to get the brand back on a positive track. It is because of our involvement in the initial McDonald’s brand revitalization that we are sensitive to the seeds of destruction, visible since 2006.

Over the years, we have said repeatedly that brands can live for-ever if properly managed. This book is a guide for effective brand leadership and for surviving the challenges of a volatile business environment.


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1

Introduction

By the beginning of 2006, the two leaders of the McDonald’s turn-around had died. Several key senior managers, who had supported the turnaround with words and actions, had left the company. Over the course of nine years, you can read the clear public reporting show-ing the pathway of McDonald’s steady decline. The years 2014 and 2015 have given us an in-depth picture of McDonald’s deterioration. (This story is described in detail online at www.ftpress.com/sixrules .)

Over the past two years, other big, beloved brands have weakened as well. For example:

• Kraft, recently split into two after the purchase of Cadbury,found itself in the arms of Heinz, itself a recent acquisition ofthe Brazilian equity group (3G Capital) that owns Burger Kingand Tim Horton’s.

• Campbell’s Soup, once a staple with multiple products inpeople’s pantries worldwide, announced its need to return torelevance. It is also the focus of much speculation as its salescontinue to stagger under the weight of a shifting food envi-ronment. In fact, in November 2015, The New York Times reported that Campbell Soup Co. was now “altering” Camp-bell’s Chicken Noodle Soup, banishing ingredients that cus-tomers do not want to consume. 1

• BlackBerry, once the most secure and ubiquitous mobile andconnective email system device, now seems to be desperatelyfocused on its software and patents. There are rumors that the

1 Strom, Stephanie, “Back to the Kitchen: Campbell Adjusts Soup Recipe to Address Changing Tastes,” The New York Times , November 10, 2015.


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2 SIX RULES OF BRAND REVITALIZATION, SECOND EDITION

new Android version of the 2015 Classic will be the last hard-ware developed and sold.

• J. Crew and The Gap had glory days that now appear as distantpast.

• After merging with Continental, hoping to share in the out-standing Continental culture and committed customer base,United Airlines is floundering with poor service and clashingorganizations leading to loss of internal alignment and systembreakdowns that are not only serious for U.S. air traffic butembarrassing.

Some brands are successful in pulling out of the downward spiral of brand decline. Lego restored the brand to strength again. Wen-dy’s and Popeye’s have become increasingly strong and popular. And there are brands that you wonder about: Microsoft, Yahoo, and Gen-eral Motors. In which directions will these big brands go?

We identified twelve troubling behaviors and attitudes that drive how big brands get off track. We call these the Twelve Tendencies for Trouble . Not every brand has committed every one of these sins. However, decline and mismanagement are not uni-dimensional ten-dencies. The Twelve Tendencies are not completely discrete either; one sometimes neatly segues right into another. Once a brand falls prey to one or more of these tendencies, it becomes more susceptible to others.

1. The arrogance of (great) success

2. The comfort of complacency

3. The building of organizational barriers and bureaucraticprocesses

4. The focus on analyst satisfaction rather than on customersatisfaction

5. The belief that what worked yesterday will work today

6. The failure to innovate

7. The lack of focus on the core customer

8. The backtracking to basics

9. The loss of relevance

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INTRODUCTION 3

10. The lack of a coherent Plan to Win

11. The lack of a balanced Brand-Business Scorecard

12. The disregard for the changing world

It is important to reinforce the enterprise- and brand-negativ-ity that falling into these trouble-traps causes. Behaving in these bad brand ways has a disastrous effect on the business culture, on employee pride, and on the heart and soul of the brand itself. These insidious inclinations must be stopped. Yet, just stopping will not make the brand well again. Stopping destructive behaviors allows for the resuscitative actions of the Six Rules Revisited to be applied. To fight the Tendencies for Trouble, we provide advice for breaking the LOCK on brand troubles through leadership, organization, culture, and knowledge.

The Six Rules are as meaningful today as they were in 2002. But the world has changed. Since we introduced these Rules, we have enhanced them with new ways of making them even more powerful.

Rule 1: Refocus the organization

Rule 2: Restore brand relevance

Rule 3: Reinvent the brand experience

Rule 4: Reinforce a results culture

Rule 5: Rebuild brand trust

Rule 6: Realize global alignment

The Six Rules are more than a list of internal and external changes for brand revitalization. It is a mistake to think that the Rules are a checklist: complete and check off. These Rules are ongoing: they are never-ending and must be ingrained into the culture of the enter-prise. These are cultural commitments at the highest level.

When we left McDonald’s, the idea was that the commitments to a refocused organization, brand relevance, brand experience, results, brand trust, and global alignment would continue. The hope was for a continuously revitalized brand and enterprise. Charlie Bell often referred to his fear of complacency. And, yet, McDonald’s fell back into its bad behaviors that Charlie Bell fought against.

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Along with the Six Rules, there is a list of Twelve Truths for stay-ing out of Trouble. These Truths are all common sense. But, as we have said for years, common sense is just not that common these days, especially when it comes to brands and brand leadership. Again, these Truths are not meant to be a checklist. Great brands need to exist in great cultures. When cultures become ossified, they damage brands, fossilize creativity, and impede all movement toward enduring profit-able growth. Keeping the cultural flame alive is critical for brands. This is why so many of the Truths relate to the organization and its spirit.

The Twelve Truths for avoiding trouble are evergreen and univer-sal. Our reviews of brands that have gotten into trouble and of those brands that have undergone revitalization show that these Truths are not only self-evident but must be made ongoing strategies for brand leaders and organizational top management.

1. Recognize that culture matters: overcome cultural resistance

2. Institutionalize change

3. Define a clear strategy for enduring profitable growth

4. Break down silos

5. Reinforce authenticity

6. Make demographics matter

7. Act like a leader

8. Stay relevant

9. Move from living off current positive momentum to creatingongoing positive momentum

10. Institute clear accountability

11. Change the reward system

12. Measure results

Our online McDonald’s case history highlights the problems that occur with not tackling the tendencies for trouble and what happens to revitalization when not following the Six Rules. McDonald’s aban-doned the success of the Six Rules for the tendencies that have placed it again in a troubled situation.

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INTRODUCTION 5

This new book demonstrates how effective the Six Rules can be and how disregard for its principles can send you back into a mar-keting and brand leadership abyss. It provides a simple framework for identifying brand trouble and staying out of brand trouble. And it shows how even in a more digital, mobile, technological, fragmented, personalized world, the Six Rules are pivotal for returning a brand to enduring profitable growth.

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Part I The Twelve Tendencies for Trouble

On March 25, 2015, Kraft and Heinz, two venerable global brands with a roster of customer favorites, announced a merger. 1 The new Kraft Heinz Co. was a piece of financial news, especially since it was engineered by Berkshire Hathaway and 3G Capital, a Brazilian firm known for its lean machine approach, its successful resuscitation of Burger King, and the merger of Burger King and Tim Horton’s. On July 2, 2015, the Kraft Heinz merger became a reality with its official opening on the stock exchange.

The more interesting discussion about the Kraft Heinz merger was not on the financial side, however. It seems as if the economic actions of cost cutting were a given. (In fact, several months post-merger, Bloomberg Businessweek ran a story called “Things Are About to Get Ugly at Kraft.” The article referred to the impending severe cost cutting and brand sales that are trademarks of 3G.) 2

At the time of the merger, after the highlights of plans for share-holders and the potential redundancies (cost cutting), the focus was on the problems plaguing the giants in the food industry, not just Kraft and Heinz, but Campbell’s, ConAgra, Kellogg, McDonald’s, Nestlé, and others, including Coca-Cola. Many reporters focused on the missed opportunities leading to the decline of “industrial” food and the rise of local, personalized, healthier, non-frozen, not processed, organic options. 3 For a variety of reasons that we will review, the big brands in food are big brands in trouble.

The concept of big brands in trouble does not only apply to food brands; also among the list are BlackBerry, United Airlines, J. Crew, The Gap, Kodak, Levi Strauss, Tesco, Whole Foods, Sears, Avon, and Sony, among others. Radio Shack closed its doors in 2015. Even the venerable P&G under the second stewardship of A. G. Lafley is strug-gling. As The Wall Street Journal reported in July 2015, “After thou-sands of job cuts and more than $20 billion in announced divestitures

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under Mr. Lafley’s second go-round as CEO, P&G is still suffering tepid sales growth, a sluggish share price and limp market-share gains.” 4

These troubles are not confined to big “old” brands, either. The recent earnings report (second quarter 2015) for Twitter showed slow growth due to not attracting new users. Twitter admitted that although the brand has huge name recognition, the “vast majority of potential new users did not understand how or why to use the ser-vice.” 5 As The Wall Street Journal reported, the brand had almost no growth in its core user group—people who sign in at least one time a month. And CEO Jack Dorsey indicated that new product features were not having a meaningful impact. 6 The numbers did not look any better in third quarter 2015 as this book went to press. User growth has continued to slow, and revenue has been falling since the sec-ond quarter of 2014. Again, October reporting indicates that there are continuing questions as to whether new efforts to attract users are having success. 7

In reviewing the current histories of multiple big brands, and through years of experience on the agency, client, and consulting sides, it is clear that there are many tendencies for trouble that each troubled brand shares. Although every business is different, the pat-terns are the same.

Many of these enterprises have serious, intelligent people who understand the present and the existing trends. They have highly capable people managing their talent pool. They hire from presti-gious universities and consulting firms, snagging the best and bright-est MBAs or computer engineers. They measure frequently and keep aware of the changing media, digital, and technological landscapes. And yet, even with all this know-how and intelligence, they miss the warning signs for entanglement in the web of troubles.

As we will show, even the biggest brands can fall into trouble. Sometimes it is a fast, free fall, and sometimes it takes decades. It is possible to change the trajectory from waning to winning. Lego is a great example, as is Starbucks, Popeye’s, and Wendy’s. Second-quar-ter 2015 profit at Burger King (based on same-store sales growth due partly to new products and improved core products) demonstrates that the fast food burger chain business is not dying, as McDonald’s

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PART I • THE TWELVE TENDENCIES FOR TROUBLE 9

seemed to be implying during the past several years. As Burger King CEO Daniel Schwartz said, “We don’t comment on our competitors but when you think about everything we’ve done, it’s all around deliv-ering a better guest experience.” 8

The patterns that we find are reflected in these Twelve Tenden-cies for Trouble:

1. The arrogance of (great) success

2. The comfort of complacency

3. The building of organizational barriers and bureaucraticprocesses

4. The focus on analyst satisfaction rather than on customersatisfaction

5. The belief that what worked yesterday will work today

6. The failure to innovate

7. The lack of focus on the core customer

8. The backtracking to basics

9. The loss of relevance

10. The lack of a coherent Plan to Win

11. The lack of a balanced Brand-Business Scorecard

12. The disregard for the changing world

There are those who believe that there is a natural brand life cycle from birth, to growth, to maturation, to decline, to death. This is wrong. Brands do not inevitably die. They can live forever. Brands get into trouble due to self-inflicted actions of their owners.

There are some who say you cannot be big and innovative. They say that when you are big, you are too slow and not creative. They say that giants cannot be nimble, quick, and inventive. These people say that when you get big, you become cautious, and you become bureau-cratic. They insist that when you become big, you become risk-averse.

But this does not need to be the case. Size and strength allow a brand to make changes of magnitude. Size and strength provide opportunities to be better and to be greater. Size and strength allow

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brands to accept risk and offer the ability to resist adversity. Size and strength give access to a greater variety of talent from which brands can draw. Yet as our review and synthesis show, size and strength are meaningless if brands do not leverage the benefits.

The Twelve Tendencies are the result of brand mismanagement. These should be considered as “stop-nows.” Each one of these Ten-dencies will be examined in depth. When it comes to brand revitaliza-tion, brand and corporate teams need to eliminate these impediments to invigoration.

The Twelve Tendencies are interconnected forces. For example, a brand that is stuck doing the same thing over and over again may also be a brand that is not innovating. A brand that forgets its core cus-tomer is probably also a brand that has lost relevance and a brand that has not kept up with the changing world. However, we will treat these as separate ideas to emphasize the role that each of these Tendencies can play in getting a brand into trouble.

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11

1 Tendency 1: The Arrogance of

(Great) Success

Nothing succeeds like success. 9 In business, there is the adulation of analysts and the praise in the press. There is celebrity and spot-light. There is hero worship, as happened with Carlos Ghosn (he even became a superhero in a Japanese comic book) as he revived Nissan, or Steve Jobs and Howard Schultz as they came back to rejuvenate their sagging brands. Gordon Bethune at Continental, Lou Gerstner at IBM, Steve Kaufman at Arrow Electronics, Cheryl Bachelder at Popeye’s, and others have succeeded magnificently in reshaping sag-ging brands.

Success is everybody’s aim; no one aims to lose. However, for some, nothing fuels arrogance more than success. It may foster an environment of “I can do no wrong.” Arrogance is at the core of the mind-set defined as “we will sell what we know how to make” rather than focusing on the customer-focused mind-set “we will promise and deliver what customers want.”

As Jim Collins, the management and leadership guru, wrote in 2009 after studying success and failure, “When an enterprise becomes successful, it can cover up a lot of sins. It is not success that makes you vulnerable, it is when you respond to that success with arrogance.” He related arrogance to hubris, the great downfall within the Greek tragedies. In an interview with The South Africa Star , Mr. Collins quoted a Classics professor’s definition of hubris, the ruin of many in Greek tragedies: that is, “an outrageous arrogance that inflicts suffer-ing upon the innocent.” In contrast, Collins found that all the leaders he discussed in Good to Great displayed a common trait: a genuine humility about their success that Collins saw as “the real antithesis of arrogance.” 10

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Many of the brands we mentioned at the beginning of this chap-ter had tremendous success over many decades. Or the brand leapt to success by leveraging an idea or taking a risk or both. Success needs to be leveraged, not lived off of. Properly managing brands means managing for continuing success. It means always taking the brand to the next level. There is no inevitable brand life cycle if you are willing to invest in the brand with new ideas and strategies. Brands can live forever if they are properly managed.

At McDonald’s, there were several successes between 2002 and 2005. Some of these were product launches, such as Chicken Cae-sar Salad. Others were policy issues, such as the three-tier pricing policy. Still others were the global launch of a new advertising cam-paign (i’m lovin’ it) simultaneously in more than 100 countries. Some were alignment-focused, when we galvanized more than one million employees worldwide. Others focused on how we worked with our agency partners under the aegis of “good ideas do not care where they come from.” And the brand had success with a new business model of “being better, not just bigger,” focusing first on improving the guest experience rather than merely opening new stores. With a clearly defined Brand Promise and global occasion-based needs seg-mentation, each success was part of making a great brand greater by being better at everything the brand did.

The McDonald’s successes were exhilarating. But Jim Cantalupo and Charlie Bell never became arrogant. They were amazing leaders. The publicity, the kudos, the rising share price, the increasing same store sales, and the positive performance scores in tracking studies were all part of turning around the McDonald’s brand. Above all, Cantalupo and Bell never fostered internal, organizational arrogance that could have turned success into corporate complacency. McDon-ald’s could always do better. Continuous improvement was a fact of life. (See Tendency 2.)

In 1991, Pepsi CEO Wayne D. Calloway stated that arrogance was the single biggest reason people did not succeed at Pepsi. “He said that there is nothing wrong with having confidence, but arro-gance is something else. Arrogance is the illegitimate child of con-fidence and pride. Arrogance is the idea that not only can you never miss [shooting] a duck, but no one else can ever hit one.” He said,

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CHAPTER 1 • TENDENCY 1: THE ARROGANCE OF (GREAT) SUCCESS 13

“Arrogance is an insurmountable roadblock to success in a business where the ‘team’ is what counts. The flipside of arrogance is team-work—the ability to shine, to star, while working within the group.” 11

Mr. Calloway’s viewpoint is not dated or passé. Just recently, Warren Buffet referred to business arrogance in his Berkshire Hatha-way Annual Report letter to shareholders (March 2015). He said, “It was arrogance, more than any other factor, that caused the banking crisis. In any area of life, arrogance is a damaging character defect, undermining interpersonal relationships, but in business it’s poten-tially lethal. A CEO who is arrogant will ignore the advice of col-leagues who may have a far better insight into risks threatening the company. That leads to bad decision-making, low corporate morale and loss of contact between senior management and employees. It destroys the culture of collegiality, of shared opinions and objectives that is crucial to the effective functioning of any organization. Once a CEO becomes isolated in a boardroom he has lost his ability to lead the company effectively.” 12

Arrogance is bad for business and bad for brands. Why? Because how you manage your brands is how you manage your business. When the CEOs of the Detroit automotive industry flew down to Washing-ton, D.C., Senate hearings on private jets and then asked for money (except Ford) to sustain their businesses, that was arrogance. Their stance affected their car brands’ perceptions as well as the percep-tions of the brand Detroit and the brand “cars made in America.” When the CEOs of the U.S. cigarette brands stood in front of Con-gress and swore their brands were safe to use, even in the face of decades of data beginning with a landmark Surgeon General’s Report in 1964, that was arrogance. Thinking that consumers will continue to buy your brands because you know best is arrogance.

Kellogg has held onto the idea that consumers will continue to “wake up” each morning by eating a bowl of sugared grains even though the share of American breakfasts that contain sugared-grain cold cereal has dropped to below 30%. And this does not include the figures on Pop-Tarts (white flour and sugar) and Eggo waffles (just plain white flour over which we pour Maple Syrup or some other sugar). 13

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It has now become automotive lore, but Ford turned down the “minivan” because the company firmly...and arrogantly...believed its station wagons were the answer for suburbanites. Suburbanites would keep driving what Ford knew how to profitably make. The Ford think-ing was that people would continue to buy what the company made rather than what they needed. Ford-exiled executive, Lee Iacocca, and his newly installed team at Chrysler, in need of a new idea, pro-duced the minivan. The rest is history.

Harley Davidson had a crisis of “success arrogance” in the 1980s. Vaughn Beals and a group of Harley managers soon purchased the company. Beals and his team turned the brand around. But they felt that the organization was flush with the hubris of success. Employees believed that Harley “had won” and nothing else had to be done. Con-sultant Lee Ozley joined the team to create a plan for culture change. As Ozley said, “There was this arrogance that we won, that we beat Japan. The organization had begun to revert to the very same behav-ior that got Harley into trouble.” 14

(Recently there have been stories about Zappos and its new orga-nizational approach called Holacracy. Whether good or bad, the new approach focuses on how not to create management by arrogance. When no one has a title and everyone is working in groups collabora-tively, being arrogant is not appreciated or rewarded.)

Another example of great brand success driving great brand arrogance followed by brand recovery is Intel. By 1994, Intel had accomplished what most pundits, marketers, analysts, and tech-types thought unnecessary and impossible: they branded a computer chip. The branding efforts were so good that most consumers looked for computers with Intel Inside even if they did not know what an Intel computer chip did while inside. That success created a climate of arrogance that exploded with brand-damaging proportions. The Pen-tium chip had some serious faults. When requests for refunds and recalls were made, Intel’s public and private response was snappish and self-protective. “It appeared that we at Intel were arrogant, we were telling customers what was good for them. Maybe we have been thickheaded...but we finally figured it out,” said then-CEO Andrew Grove in a reflection of the incident. Once the leadership realized their arrogance was affecting the brand’s image, they recanted and ran a full-page ad in newspapers apologizing. 15

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CHAPTER 1 • TENDENCY 1: THE ARROGANCE OF (GREAT) SUCCESS 15

Avoiding arrogance takes character and effort on the part of lead-ers. It is a test of true great leadership to fight the inclination of focus-ing on oneself rather than the brand and its customers. The leader who creates a culture of arrogance by letting success go to the head and ego is a leader who is more committed to self than to brand.

Endnotes 1. Pittsburgh Business News , July 2, 2015.

2. Berfield, Susan and Noah Buhayar, “Things Are About to Get Uglyat Kraft,” Bloomberg Businessweek , August 24–30, 2015.

3. Leonard, Devin, “Bad News in Cereal City: Will Kellogg Ever Catcha Break?” Bloomberg Businessweek , March 2–8, 2015; Silverman,Gary, “Craft Versus Kraft: Big US Food Groups Have Missed aMajor Shift in the Nation’s Tastebuds as Customers Seek FresherFare and More Exotic Flavours. Can the Companies Find NewBliss Points to Woo Them Back?” Financial Times , March 17, 2105;“Slimming Down: America’s Processed Food Makers Are Havingto Adapt to Declining Popularity,” The Economist , May 2, 2015;Gasparro, Annie, “Kellogg Chases Changing Consumer: RevenueFalls 5% Amid Stronger Dollar, While Profit Tumbles 44% on Cost-Cutting Moves,” The Wall Street Journal , May 6, 2015; Gasparro,Annie, “Indigestion Hits Food Giants,” The Wall Street Journal , February 13, 2015.

4. Byron, Ellen, Serena Ng, and Joann S. Lublin, “Lafley to Hand OverReins at P&G,” The Wall Street Journal , July 28, 2015.

5. Goel, Vindu, “At Twitter, Slow Growth in New Users Disappoints,” The New York Times , July 29, 2015.

6. Koh, Yoree, “Twitter Ad Woes Subside, but Growth Stalls,” TheWall Street Journal , July 29, 2015.

7. Overheard Column, The Wall Street Journal , October 26, 2015.

8. McKinnon, Judy, and Julie Jargon, “Burger King Owner ToutsSales,” The Wall Street Journal , July 28, 2015.

9. Dumas, Alexandre, Ange Pitou , Vol. 1; from a French proverb. See Bartlett’s Familiar Quotations , Seventeenth Edition, Justin Kaplan,general editor, Little Brown & Company, Boston, 2002, p. 450.

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10. The Star, South Africa , “Greatness Is a Matter of Choice,”September 9, 2009, p. 76.

11. Moskal, Brian S., “Arrogance: The Executive Achilles Heel:PepsiCo Has Isolated Three Critical Reasons Why Some Fast TrackExecutives Didn’t Reach the Promised Land,” Industry Week , June 3, 1991, p. 19.

12. Askeland, Erikka, Aberdeen Press and Journal , March 16, 2015.

13. Leonard, Devin, “Bad News in Cereal City: Will Kellogg Ever Catcha Break?” Bloomberg Businessweek , March 2–8, 2015.

14. Investor’s Business Daily , March 27, 2001.

15. Crainer, Stuart, “The 50 Best Management Saves,” ManagementReview , November 1, 1999, p. 16.

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17

2 Tendency 2: The Comfort

of Complacency

On April 17, 2015, H Partners Management, LLC sent a letter to shareholders of Tempur Sealy, the mattress company with the well-known brands Tempur-Pedic and Sealy Posture Pedic. At that time, H Partners owned approximately 10% of the outstanding shares of Tempur Sealy, making it the Company’s largest shareholder. The let-ter sent a clear message to the Board of Directors demanding leader-ship change on the board.

In its letter, H Partners said that “Tempur Sealy possesses all the components of a successful company: industry-leading products, iconic brands that have stood the test of time, and a talented team of dedicated employees. However, despite these positive attributes, we believe the Company’s stock is significantly undervalued due to mismanagement by an entrenched and misaligned Board. Earnings have declined drastically.... Two major chapters have come to define Tempur Sealy’s poor execution under CEO Mark Sarvary.” 1

In defining (in no uncertain terms) the issues substantiating a change of Directors, H Partners listed complacency as the first chap-ter of the Tempur Sealy mismanagement saga. Here is how H Part-ners described this:

“Poor Execution, Chapter 1 : Apparent Complacency Leads to a Precipitous Decline in the Tempur-Pedic Segment.... In 2011, the current Board and CEO ignored two critical pieces of customer feedback: Tempur-Pedic mattresses (i) had an outdated appearance, and (ii) were perceived to “sleep hot.” These issues were widely known; not surprisingly, a com-petitor pounced on these deficiencies by introducing a sleek,

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modern-looking memory foam mattress that responded to customer concerns by containing a layer of ‘cooling gel.’ This new competitive mattress gained instant traction with customers, and started to erode Tempur-Pedic’s decades-long dominance in the memory foam segment. Other copy-cat competitors replicated the same strategy, further eroding Tempur’s position.” 2

As for the next complaint, “Poor Execution, Chapter 2 : Opera-tional Missteps After Sealy Acquisition Lead to Further Earnings Decline,” H Partners blamed complacency as well. “Due to their complacency, management and the Board were already struggling.” 3

For brands and organizations, complacency must be avoided. It stops ideas, innovation, and keeping up with its customers. It allows employees to keep on doing what they are most comfortable doing. It lulls people into laziness and inaction. It crushes curiosity and cre-ativity. And, as H Partners pointed out, complacency leads to market share loss, and then, under-performance. Complacency gives you the opportunity to stop looking at the changes in the world around you and in your specific market segment. Brands are not passive; they are promises. Brands are active promises of an expected, relevant experi-ence. Brands can be soft, quiet, traditional, laid back, and chill, but they have to move if they want to deliver a relevant experience. Com-placency creates inaction and, eventually, irrelevancy.

At McDonald’s, complacency was something Ray Kroc wanted to avoid. He saw how the brand could fall into routine and rote and never make headway in the present or into the future. Charlie Bell, who started working at McDonald’s in Australia at 14 years old, continu-ously feared the creep of complacency. As president and then CEO, Charlie Bell always spoke of avoiding a culture of complacency. He inspired the audience to understand how terrible complacency could be for the brand. He recognized that the comfort of complacency was good for avoiding risk and accountability. He knew that, covered in the cloak of complacency, any McDonald’s employee could keep the brand behind its competitors, eventually becoming an old, infre-quently used, tired stand-by for its customers.

Complacency takes your eyes off the new entries in your category and in your identified segments. Related to the arrogance of success,

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CHAPTER 2 • TENDENCY 2: THE COMFORT OF COMPLACENCY 19

the more powerful and successful the brand, the easier it is to walk off the complacency cliff. Arrogance leads you to believe that you have achieved success; complacency leads you to believe that there is now nothing left to do but live off this success.

Charlie Bell spoke about complacency so often that we cited these points in our first book, Six Rules for Brand Revitalization . He often reminded us, “McDonald’s brand needed more insistence, consis-tence and persistence. He would say that McDonald’s fostered a cul-ture of stagnation that breeds complacency.” For Charlie, pride and passion were the key ingredients for McDonald’s. He saw that “com-placency got in the way of generating passion and instilling pride.” 4 Shortly after his death, online at MSN Dell Money very presciently reported that under new CEO, Jim Skinner, McDonald’s was ignor-ing its core burger business. “That complacency may lead to customer alienation over the long run. After all, plenty of companies from CKE Restaurants to Red Robin Gourmet Burgers are working hard to reach burger aficionados. If McDonald’s neglects its core products for too long, it may find that its next big thing will be to win burger fans back.” 5

Companies that fall into complacency due to their belief in the power of their brand lose because other brands are innovating all the time. “That’s how giants fall,” says Stephen Goldberg, whose Pierre-fonds-based (Canada) consulting firm, Optimus Performance, offers organizational planning, training, and leadership development to Canadian companies. “They stop looking outside at who’s coming up and what the threats are.” 6 Mr. Goldberg, in an article in The Gazette (Montreal) , reminds us of Melita: once the brand in individual and customized coffee, it is now one of many but not the most prominent one. 7

Complacency is one of the reasons Levi Strauss is now forced to remake itself. More than 20 years ago, according to Bloomberg Busi-nessweek , Levi Strauss was bigger than Nike (revenue exceeding $7 billion). Today, it is struggling to regain customers: customers it lost to—of all things—yoga pants. Bloomberg Businessweek points to Levi Strauss’s ability to just churn out the jeans, quoting Greg Ellis of Kurt Salmon who said, “They weren’t a dynamic business for the longest time.” 8 The company could not see yoga pants as a casual alternative to blue jeans.

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Again, in his (2015) shareholder letter, Warren Buffet selected complacency as another “corporate cancer,” stating that it is the most dangerous because it has its roots in past success. But this does not mean the same will happen next year. Past success does not mean subsequent success. CEOs who continue to ride on the wave of past work create a culture that is lackadaisical and lazy. 9

As you will read in the McDonald’s case online, there was a cul-ture of complacency defined by going with the flow—staying with the established momentum but not looking forward. Cultural compla-cency is probably one of the reasons McDonald’s is in trouble today seeking another brand revitalization. Under Jim Skinner’s leadership, the positive momentum created under the leadership of Cantalupo/Bell covered up complacency. Eventually the momentum ran out, and the results of complacency were revealed.

In 2008, an article on The Ritz-Carlton hotel chain focused on its decision to fight complacency and make changes that better suited the needs of customers. The work Ritz-Carlton completed was chronicled in American Executive . As the article began, “The Ritz-Carlton Hotel Company has enjoyed decades of recognition as one of the premiere providers of elegance and service professionalism. The company’s success also brought forth one of its most significant risk factors: complacency.” 10 The Ritz-Carlton example shows that com-placency crosses industries; it is not something that only afflicts pack-aged goods, clothing, or fast food brands. All brands are vulnerable.

Complacency blinds an organization to the forces of the chang-ing world. It creates a “staying alive” mentality rather than a “moving forward” mentality. Complacency supports the static mind-set that keeps the brand away from risk. As the Frederic Forrest character Chef says in Apocalypse Now , “Never get off the boat.” Or think of the Noah Syndrome, “All I want to do is survive.” 11

Complacency is a culture flaw. Brands need leaders who fight complacency. There is a smugness and self-satisfaction with compla-cency. True, it is satisfying. But from a brand perspective, it gener-ates inaction supporting the trajectory of continuing to do what has worked in the past instead of what will work in the future.

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CHAPTER 2 • TENDENCY 2: THE COMFORT OF COMPLACENCY 21

Endnotes 1. Business Wire , “H Partners Sends Letter to Tempur Sealy

Shareholders; Urges Shareholders to Send a Clear Message ThatContinued Underperformance and Repeated Execution ErrorsOverseen by the Management and Board Are Unacceptable; Votethe BLUE Proxy Card Today,” April 17, 2015.

2. Ibid, Business Wire , April 17, 2015.

3. Ibid, Business Wire , April 17, 2015.

4. Light, Larry, and Joan Kiddon, Six Rules for Brand Revitalization:Learn How Companies Like McDonald’s Can Re-Energize TheirBrands ,” Wharton School Publishing, February 2009, p. 20.

5. MSN Dell Money , January 18, 2006.

6. Nebenzahl, Donna, “Times Are Still a-Changin’—Especially inBusiness: Companies Must Avoid Complacency; Marketplace IsLittered with Those That Didn’t Take Relentless Tide into Account,” The Gazette (Montreal) , January 10, 2005.

7. Ibid., Nebenzahl, Donna.

8. Higgins, Tim, “Distressed Denim: At 162 Years Old, Levi StraussConfronts the Yoga Pant,” Bloomberg Businessweek , July 27–August2, 2015.

9. Ibid., Askeland, Erikka.

10. Mkhell, Joseph, “Risking Excellence: Ritz-Carlton Didn’t WaitUntil Complacency Affected Its Bottom Line. Instead, It Took aCalculated Risk on Change,” American Executive , October 1, 2008,p. 24(3), Vol. 6, No. 9.

11. Hine, Thomas, The Great Funk: Falling Apart and Coming Together(on a Shag Rug) in the Seventies , Sarah Crichton Books, 2007, p. 52,“The Noah Fetish.”

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23

3 Tendency 3: The Building

of Organizational Barriers and Bureaucratic Processes

In July 2015, the newly arrived chairman of Barclays Bank, John McFarlane, fired the CEO, Antony Jenkins. (Only recently, in third quarter 2015, has Barclays installed a new CEO.) Saying this move was entirely a Board decision, Mr. McFarlane was blunt in his assess-ment of the deterioration of the bank. And, he was even more outspo-ken on the bank’s entrenched management structure. In an interview with The Daily Mail , he said, “’Bureaucracy! This is the worst example of a large company I have ever been associated with. It is endemic. It is not going to be easy to deal with. Barclays has 375 management committees—and that is 370-something too many.” 1

Silos and bureaucracy are compatriots in slowing brand develop-ment and enduring profitable growth. As we discussed in our previous book, New Brand Leadership , silos are dangerous. “Silos are delete-rious to brand health and for organizational health. They create all sorts of bad behaviors, such as hoarding, stopping the spread of ideas, internecine conflicts, and reinforcement of the status quo. This is not feudalism because there are no fiefdoms. Silos are for storage, not sharing. They reinforce lack of accountability for business results; it is always the other silo’s fault.” 2 Pair silos with the snaking lines and levels of bureaucracy, and a brand can stagnate. Silos and bureaucra-cies get in the way of brands succeeding.

Like Barclays, Eli Lilly, the pharmaceutical company, faced a sti-fling bureaucracy in 2008 that impeded innovation and decisiveness. The company not only changed its executive leadership structure, but also immediately implemented a number of changes designed to

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reduce bureaucracy through eliminating excessive layers of manage-ment. This in turn would “speed decision-making by clarifying roles and accountabilities, and allow the company to respond more quickly to critical business needs.” 3

When Howard Schultz returned to Starbucks in 2008, he encoun-tered a bloated bureaucracy that was getting in the way of the brand’s famous customer service. As some press reported, Howard Schultz regained the reins as Starbucks’s CEO “after a year of falling stock prices, internal bureaucracy and growing competition.” In an article online, Michael Brown (author of Fresh Customer Service: Treat the Employee as #1 and the Customer as #2 and You Will Get Customers for Life (Acanthus Publishing 2007) stated, “Starbucks’s initial cus-tomer service was based on an employee friendly model, but it eroded over time and through the quick expansion of the company, increased bureaucracy, and a cookie cutter-type in store experience....” 4

Silos reigned at IBM until 1999. The IBM brand had perceptions of arrogance, slowness, and being out of touch with the quickly evolv-ing technology revolution. IBM had more than a dozen quasi-auton-omous businesses and 70 ad agency partners worldwide before Lou Gerstner arrived. 5

How an enterprise organizes affects the brand. As we continue to say, how you manage your brands is how you manage your business. Brand management is business management. When organizations are designed to protect management from risk, to deflect accountabil-ity, to slow decision-making, to inflate a person’s or a group’s image, then a brand will wither. Sony, Mattel, and Target experienced the brand eroding effect of bureaucracy: bureaucratic processes of exten-sive documentation work against creativity and collaboration across functions.

Once Sony was the darling of electronics products. Sony had the trust and respect of consumers and industry leaders. Its brand reputa-tion was impeccable. So what happened? There is a lot written about the travails of Sony. Analysts say it is essentially a case of exploding bureaucracy and competing silos. “‘Too many power players and not enough power plays, analysts said. It really boils down to manage-ment; it’s not structured like a company that needs to move nimbly to keep these divisions surviving,’ explained IHS analyst Wayne Lam. ‘I

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CHAPTER 3 • TENDENCY 3: THE BUILDING OF ORGANIZATIONAL BARRIERS 25

AND BUREAUCRATIC PROCESS

think it’s really bogged down by bureaucracy, and turf wars, like who gets what resources.’” 6 Sony was a company known for innovation. It brought music to one’s ears with the first mobile music player, the Sony Walkman. It fought the good fight for its innovative Sony Beta-max video format. Sony TVs lasted for 10 years or more with Boomers carting the TV from dorm room to first apartment. Its video cameras were unique. And then, the layers and layers of bureaucracy, with its aversion to accountability, snuffed out the innovation gene. The brand lost innovation leadership to Apple, Samsung, and LG.

Mattel lost another CEO in January 2015. Part of the reason for the resignation was the lack of innovation and creativity, and this within the home of Barbie and Fisher-Price. “Mattel’s innovation problem can partly be blamed on a bureaucratic culture that unwit-tingly stifled creativity—the lifeblood of toy firms.” Analysts reported that Mattel’s bureaucracy made the company slow while the pace in the toy business has quickened. With bureaucracy and silos, newly merged (Canadian toy company) Mega Brands’s employees said “...things that at Mega Brands take two hours to do take two days at Mattel, and things that take two days at Mega Brands take two weeks at Mattel.” 7

When Brian Cornell became Target CEO, one of the areas he addressed immediately was the organization. Although the brand had lost its “cool” cache, internally it suffered from a risk aversion that stifled creativity and a “strangling bureaucracy.” This extreme cau-tion, entangled with deadly red tape, led Target to forfeit its sales to stores like H&M, T.J. Maxx, and dollar stores. 8

One of the Six Rules focuses on global alignment. Allowing bureaucracy to rule defeats any chance of aligning globally. In fact, bureaucracy is the antithesis to global alignment. Another Rule is refocusing the organization. Create a brand-focused, customer-centric organization. It is difficult to revitalize or grow a brand when the culture is fractionated into bunkers and webs. Bloated bureau-cracy stultifies a culture. It prevents collaboration. Silos and bureau-cracy have no place when it comes to enduring profitable growth. Bureaucracy and silos prevent brands from staying contemporary and innovating for the future.

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Endnotes 1. Sunderland, Ruth, “CITY INTERVIEW: Bureaucracy-Bashing

Barclays Chairman John McFarlane on Ousting Former Boss AntonyJenkins,” Mail Online (The Daily Mail) , July 9, 2015.

2. Ibid, Light and Kiddon, New Brand Leadership .

3. Pharma Company Insight, “Lilly Makes Changes to ReduceBureaucracy and Streamline Decision Making,” May 22, 2008.

4. Brown, Michael, “Starbucks Visionary Resumes Control: SchultzNeeds to Amp Up Focus on Java Giant’s ‘Eroded’ CustomerRelations, Consultant Says,” Bulldog Reporter’s Daily Dog , January 10, 2008.

5. Farrell, Greg, “Building a New Big Blue: IBM’s Makeover to aCompany with Soul Shows Businesses Can Re-Brand,” USA Today , November 22, 1999.

6. Agomuoh, Fionna, “Can Sony Corp. Save Its Dying ElectronicsBrand? Turnaround Plan Starts with Xperia Z4 Smartphone,” International Business Times , January 30, 2015.

7. Li, Shan, “Mattel’s CEO Resigns as Toy Maker Struggles, LosAngeles Times , January 27, 2015.

8. Wahba, Phil, “Back on Target?” fortune.com , 2015.

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27

4 Tendency #4: The Focus on

Analyst Satisfaction Rather Than on Customer Satisfaction

As we write this book, there is an ongoing public discussion on the case for shareholder reform that moves away from the short-term behavior and immediate rewards that motivate CEOs. Although there have been those who argued for a revision of analysts and sharehold-ers rewards for corporate quarterly increases, the issue came to the front with a letter from Larry Fink, CEO of BlackRock Inc., in April 2015. Mr. Fink sent a letter to the CEOs of the 500 largest publicly listed U.S. companies. His letter urged them to focus on a long-term approach to creating value for shareholders or risk losing BlackRock’s support. He stated that companies should actively avoid surrender-ing to the short-term pressures created by the increase in activist shareholders. In the letter, CEO Fink wrote that a company’s focus on stock buybacks sends “a discouraging message about a company’s ability to use its resources wisely and develop a coherent plan to cre-ate value over the long-term.” Companies that are committed to long-term shareholders “can expect our support,” Mr. Fink wrote. 1

In July 2015, the fight against “quarterly capitalism” was an eco-nomic pillar of Hillary Clinton’s political platform. The columnist for The Wall Street Journal , William A. Galston, agreed, “Hillary gets it right on short-termism.” In his opinion piece, Galston cites a 2005 survey of CEOs and CFOs in The Journal of Accounting and Econom-ics . The study reported, “to avoid missing their own quarterly earn-ings estimates, 80% were willing to forgo research and development spending, and 55% were willing to delay promising long-term projects that met their firms’ internal return on investment requirements. A

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recent McKinsey survey yielded similar results.” 2 As Financial Times stated, “Ending the tyranny of quarterly earnings is an idea that is on the march.” 3

Additionally, The New Yorker , a literary and contemporary cul-ture magazine, ran a story about this short-term versus long-term situ-ation on its Financial Page column. As the writer, James Surowieki, opined, “In recent years, it’s become a commonplace that American companies are too obsessed with the short term. In the heyday of Bell Labs and Xerox PARC, the argument goes, corporations had long time horizons and invested heavily in the future. But now investors care only about quarterly earnings and short-term stock prices, so companies skimp on R&D and waste hundreds of billions propping up their stock with share buybacks.” 4 Although the author does not completely agree with the current assessment of the financial indus-try, it is a hell of an opening and underscores the basis of the debate. We have worked with brands and companies where financial engi-neering and readying for the sale are the goals. It can get ugly and sad.

Most recently, The Wall Street Journal’s DealBook special section ran an article by Andrew Ross Sorkin on short-term traders versus those “in it for the long term.” Mr. Sorkin stated that this is “the ques-tion of the moment” as activist investors “put some 200 companies” into play and “replaced 19 chief executives.” Although the article is balanced and does not take a stand, it does point out that there is no excuse for “activist shareholders’ seemingly short-term financial engi-neering efforts like buy-backs, dividends, spinoffs and sales, which can quickly send shares spiking while potentially leaving the company more vulnerable later, especially when a company uses borrowed money to buy its own shares.” 5

The financial engineering that underlies stock buybacks is now (in the United States) under scrutiny. However, the spread of the taint is beginning. CEO Larry Fink may have raised the issue to the surface, but it currently is open to commentary and criticism. Andrew Ross Sorkin also wrote, “Ultimately the pressure for companies to invest in their operations and new jobs is only going to come when managements see a real business opportunity—and shareholders demand it.” 6

A 2014 Harvard Business Review article called those CEOs who favor buybacks—and increased dividends— value extractors as

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CHAPTER 4 • TENDENCY 4: THE FOCUS ON ANALYST SATISFACTION RATHER THAN 29

ON CUSTOMER SATISFACTION

opposed to value creators . Yes, (giveback/buyback) executives are happy, and shareholders are happy, but it is a system that short-changes workers and crimps overall economic prosperity. We worked with companies in which the CEOs focused on stock buybacks and annual dividend increases. In each case, the company’s brands have empty pipelines, and the only approach is focusing on initiatives that produce “in the year, for the year” results. As reported in the Harvard Business Review article, when CEOs default to buybacks and divi-dends, “trillions of dollars that could have been spent on innovation and job creation in the US economy over the past three decades have been used for what is effectively stock-price manipulation. ”7

When it comes to brands, there are two killer approaches; both can be understood as financial engineering. One has to do with the focus on doing whatever it takes to meet analyst quarterly (sometimes monthly) expectations, regardless of whether it is good for the brand and the brand’s customers. These companies are Wall-Street-driven rather than customer-driven. This can include all sorts of things, including buybacks. The second approach is the rise of the activist investor who focuses on making a short-term dollar for shareholders rather than building a brand that requires both short-term and long-term strategies. Although we hear of activists who insist they are inter-ested in the brand long term, their definition of long term appears to be shorter than brands really need. And when activists start manag-ing brands, cost cutting reigns, and resources for enduring profitable growth are siphoned into shareholders’ pockets.

The Danish jeweler Pandora is following the advice of the analyst community even if it hurts the brand, as reported in Financial Times . After a serious profit warning four years ago, two-thirds of its market capitalization was expunged on the Copenhagen stock exchange. Since then, the jeweler has grown through brand-building efforts including expansion, more frequent product introductions, and a relationship with Disney. “Pandora has experienced a remarkable turnaround in investors’ affections.” 8 On the other hand, the quirky gourmet burger joint Red Robin could not increase earnings high enough for Wall Street and was punished with a post-reporting stock sell-off. At last quarter reporting (July 2015), Red Robin indicated earnings rose 18% in a highly competitive segment of fast-casual restaurants. Yet, a profit

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of U.S. $11.2 million up from U.S. $9.5 million a year earlier was not good enough for analysts. 9

At this writing, all eyes are on Mondeléz, the confectionary/snack food split-off of Kraft. The company has fended off activist Nelson Peltz but is now facing William Ackman. Mr. Ackman is buoyed by the recent Kraft takeover by 3G’s Heinz. He envisions a bigger (Mon-deléz) company, with better margins. And, at this moment, there is activity in the hotel sector with Starwood (Sheraton, W, Westin) under pressure from a few hedge funds that have increased holdings. “(This) comes at a time of increased activity by hedge fund managers in the hotels sector, driven by the hopes for consolidation and restruc-turing of property portfolios that could unlock cash to be returned to shareholders.” 10 (In fourth quarter 2015, Marriott bought Starwood.)

An interesting example of how activist investors who care about making a short-term gain can affect brands is the Darden/Red Lob-ster/Olive Garden/LongHorn Steakhouse versus Starboard Value LP proxy fight of 2014. As an activist shareholder, Starboard believed that the Darden brands were mismanaged and not making as much money for shareholders as possible. Starboard fought for the replacement of twelve Board members due to Darden’s declining profits. During the dispute, the Darden Board members authorized the sale of the Red Lobster brand to Golden Gate Capital. The Board based the sale on a review of the brand, its customer base, the rising commodity prices for seafood, and the brand’s falling guest count. The Board stated that the sale was best for the Darden group. Starboard Value LP went publicly ballistic, creating such animosity that the Board generated an open letter to shareholders accusing Starboard of making false and misleading statements. 11

As the fight continued, Starboard was able to oust the Board. And in January 2015, Starboard did what other activist shareholders sug-gest for short-term returns: spin off the real estate as a REIT. (“A REIT pays little or no taxes on earnings as long as they distribute the bulk of their profits to investors through dividends, which is why they are attractive to investors.” 12 ) The new Board spun off real estate for Olive Garden restaurants. The reporting was: “The Board has approved a strategic real estate plan to pursue a separation of a portion of the Company’s (Darden’s) real estate assets. The separation would

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be achieved through a combination of selected sale leaseback transac-tions and the transfer of a portion of its remaining real estate assets to a new real estate investment trust (“REIT”) that will be separated by a spin-off, split-off or similar transaction, resulting in the REIT becom-ing an independent, publicly-traded company (the “REIT Transac-tion”).” Specifically, the Olive Garden plan was as follows: “Under the plan being pursued, Darden will transfer approximately 430 of its owned restaurant properties to the REIT, with substantially all of the REIT’s initial assets being leased back to Darden. The leases are expected to have attractive rent coverage ratios, fixed rent escalations and multiple renewal options at Darden’s discretion. The potential REIT would be well positioned to expand through real estate acquisi-tions of other businesses.” 13

This approach to divest the real estate and make short-term returns is a fashionable, activist one. It does not take into account making money from brand investment. REITs can also harm fran-chisees because they put extra financial burden on their shoulders. A REIT takes the short-term (and significant) dollars and returns these to shareholders. The problems with the activist and short-term, quar-terly returns approaches are that money that could be brand-invested is lost. The brand is starved. But shareholders are happy. And that was certainly the case with Darden. As reported, investors could not keep their hands off of Darden stock once the REIT was announced. Darden stock lifted as much as 5.8%, advancing its yearly rise to more than 20%. 14 And although first quarter 2015 profits went up for Olive Garden after the nasty public Board overthrow, the company admits that marketing costs went down and traffic dipped, so there is a cost cutting versus investment balance in process. 15

REITs do not take into account customer needs unless the cus-tomer holds the brand’s stock. But this is not the only way in which brands are beaten up by analysts, shareholders, equity firms, and hedge funds. Being forced to meet analyst expectations while forcing management to chase quarterly earnings hurts brands as well. This does not focus on doing the right thing in the right way for the right reasons. It avoids brand investment in favor of dividends for share-holders. As the case study on McDonald’s shows, the need to satisfy analysts and investors four times a year becomes the way the busi-ness is run. If you review at least 15 years of reporting on Campbell,

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you will see a company that went from quarterly meeting to quarterly meeting and many times reacted to analysts to lift revenues and share price. The history of Campbell is an up-and-down quarter-to-quarter roller coaster where the financial community was never satisfied for long.

During David Johnson’s tenure as Campbell CEO, analysts pro-vided short-sighted direction along with their expectations that may have, in hindsight, allowed Campbell to take a distorted view of the marketplace. For example, in 1993, analysts stated that Campbell’s condensed soups had nothing to worry about when it came to private label soup. The analysts were quoted as saying that the generics and store brands in the cookie and soda aisles would not find their way to the soup aisle. 16 That is probably some of the worst analytic advice ever distributed. All you have to do today is go to a Publix or a Safeway or an Aldi and peruse the soup aisle. Or go to a Whole Foods and look at their 360 label in soup versus Imagine and Pacific labels.

With McDonald’s, the desire to keep the positive quarters con-tinuously coming can be seen starting in 2006. The executive team continued to keep the same actions going because there was this great success story for analysts of consecutive positive quarters. Inter-estingly, in June 2015, the new CFO of McDonald’s stated that the company was looking at REITs and would continue “looking at all opportunities to further enhance value for shareholders.” 17 A push for a REIT was fought off by ex-CFO Matt Paull, who retired during Jim Skinner’s tenure. And, in August (2015), The Wall Street Journal ran an article on the real estate conundrum facing McDonald’s. Activ-ists are salivating over the possibility of an instant company worth at least $20 billion. However, some are more sanguine seeing the finan-cial harm that could affect already struggling franchisees. Rents could go up to cover the “rent plus premium” that McDonald’s currently charges. With a REIT, those premiums would disappear. 18 As of November 16, 2015, McDonald’s announced that it would not create a REIT. However, McDonald’s will borrow money for dividends and buybacks.

At Coca-Cola, CEO Muhtar Kent distributed an article on cost cuttings and firings at Heinz. Brazilian 3G Capital, along with one of Coke’s largest and best-known shareholders, Warren Buffet, took

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over Heinz. Mr. Kent’s purpose for the article’s circulation was to say, “If we don’t do what we need to do quickly, effectively, execute 100%, then somebody else will come and do it for us.” 19

Brand-driven growth must be the goal of management. This is how brand management links to business results because, as we say, how you manage your brand is how you manage your business. Marketing is about managing the business, and managing the business is bigger than managing messages and media, which is what most marketing focuses on today. Effective marketing is not merely about message and media management; it is a business management profession. It is fundamentally about profitably attracting and retaining customers. Marketing is all about how we profitably manage customer-driven, top-line growth. The purpose of brand management is the enduring profitable growth of the business.

Of course, Boards have a duty to shareholders. But Boards must recognize that there is no shareholder value unless there is customer-driven brand value. Boards understand that all growth is not equally valuable. There is high-quality growth and low-quality growth. Low-quality growth actually destroys value even while revenues increase.

Finance people often remind us, “It’s all about the bottom line.” There cannot be enduring growth of the bottom line unless we cre-ate quality growth of the top line. This means changing from being a supply-focused company to becoming a customer-focused company. But one thing is clear: you cannot cost manage your way to enduring profitable growth. Growth has to be profitable and must be enduring. Brands must focus on satisfying customer needs—anticipating cus-tomer needs rather than catering solely to shareholder riches.

This is not to say that activists and the focus on analysts’ predic-tions are all for the worse. Several years ago, P&G faced activist Bill Ackman who, according to reports, helped foster discontent among shareholders. It is because of Mr. Ackman’s assertions relative to P&G profitability and management that the CEO, Bob McDonald, was ousted. The company turned to McDonald’s predecessor, A.G. Lafley, to take the reins again. Many on the outside credit shareholder pressure to reexamine its growth and strategies with the sale to Coty of P&G’s beauty businesses, as well as the sale of Duracell to Berk-shire Hathaway. 20

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Some American food companies lost relevance (see Chapter 9 , “Tendency 9: The Loss of Relevance”) because they focused on pleas-ing Wall Street with cost cutting and profit margins instead of looking at what consumers want. While consumers became more informed, more demanding, and more focused on ingredients and dietary well-ness, food companies cut back on internal investment in R&D and in market research. The idea that companies could balance sound fiscal accountability with insightful consumer input generating product cre-ativity was lost. “I am aware that business must be financially sound. But when all you are looking at is the quarterly returns, it encourages everybody to trade off current sales for future sales,” remarks John Stanton, professor of food marketing, Saint Joseph’s University, Phila-delphia, Pennsylvania. 21

And in August of 2015, The Wall Street Journal reported that although the cost-wringing approach of 3G Capital Partners LP was boosting profits, the market share for Heinz was falling. Profit mar-gins have improved, but when it comes to sales performance, the Heinz record is depressing. Over the two years that 3G Capital has owned Heinz, market share has declined in 65% of the categories in which Heinz brands compete. New products have been spotty and not particularly successful. And, a more recent article points out that 3G Capital will cut $1.5 billion in costs from Kraft Heinz Co. before 2018. There will be firings of employees across and through all levels of management. Some brands may be sold. The idea is to be more efficient, but the article points out that this is all about reducing mar-gins for short-term profitability. 22 Although Burger King has shown improvements, the article points out that 1) the improvements came off of seriously poor levels so any improvement is good; and 2) 3G Capital is “deal” focused and the merger of Burger King and Tim Horton’s (Canadian coffee and doughnut chain) has helped positive reports. As for Burger King innovations, there have been few. How-ever, the focus on the core products, burgers and fries, has helped turn around the brand. 23

The new management team at Kraft Heinz Co. has promised that it plans to increase profit margins over the course of a few months by eliminating around $1.5 billion in costs from the newly combined bud-gets of both companies. 24 Resources must be allocated to long-term growth as well as short-term profits. A balance must be achieved. A

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brand needs short-term and long-term strategies because if the short term is ignored, there will be no long term. However, without long-term strategies, there will not be enduring profitable growth.

Peter Drucker, the respected management guru, once said, “The purpose of business is to create a customer.” 25 Losing customer focus is a certain path to trouble. The future will belong to customer-focused businesses that are best at attracting and retaining customers resulting in sustainable, profitable share growth.

Endnotes 1. Toonkel, Jessica, “BlackRock CEO Warns Against Caving to

Activists,” National Post’s Financial Post & FP Investing (Canada) , April 15, 2015.

2. Galston, William A., “Hillary Gets It Right on Short-Termism,” TheWall Street Journal , July 29, 2015.

3. Luce, Edward, “Hillary’s War on Quarterly Capitalism,” FinancialTimes , July 27, 2015.

4. Surowiecki, James, “The Short-Termism Myth,” The New Yorker , August 24, 2015.

5. Sorkin, Adam Ross, “DealBook—The Long and Short of It,” TheNew York Times , November 5, 2015.

6. Sorkin, Adam Ross, “DealBook—Stock Buybacks Draw Scrutinyfrom Politicians,” The New York Times , August 11, 2015.

7. Lazonick, William, “Profit Without Prosperity,” Harvard BusinessReview , September 2014, pp. 46–55.

8. Milne, Richard, “Charm Bracelets and Rings Shine Brightest forPandora,” Financial Times , August 12, 2015.

9. Stynes, Tess, “Red Robin Results Don’t Fly on Wall Street,” TheWall Street Journal , August 12, 2015.

10. Foley, Stephen, “Hedge Funds Add to Pressure on Starwood,” Financial Times , August 17, 2015.

11. Darden Restaurants, “Darden Addresses Inaccurate and MisleadingStatements by Starboard and Provides the Facts on Value Achievedwith Red Lobster Sale; Files Presentation and Issues Open Letter

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to Shareholders Regarding Red Lobster Divestiture,” PR Newswire , August 4, 2014.

12. Jargon, Julie, and David Benoit, “Darden Cooks Up a REIT to LiftProfits,” The Wall Street Journal , June 24, 2015.

13. American Daily Stock Report, “Darden Restaurants AnnouncesStrategic Real Estate Plan: Intends to Pursue a REIT Separation,Continued Sale Leasebacks of Select Restaurant Properties andthe Sale Leaseback of Restaurant Support Center,” News Bites USMarkets , June 24, 2015.

14. Yuk, Pan Kwan, “Wall Street: REIT Spin-Off Move Leaves InvestorsSeeking a Good Slice of Darden,” Financial Times , June 24, 2015.

15. “Darden Restaurants: Back for Seconds,” Financial Times , March 26, 2015.

16. Leckey, Andrew, “Generics Becoming Names to Trust as BrandsFace Stiffer Competition,” Chicago Tribune , May 10, 1993.

17. Ibid, Jargon and Benoit, June 24, 2015.

18. Jargon, Julie, “McDonald’s Lands in a Real Estate Dilemma,” TheWall Street Journal , August 26, 2015.

19. Esterl, Mike, “Coke Chief’s Solution for Lost Fizz: More Soda.Despite Changing Tastes, CEO Kent Doubles Down on CarbonatedDrinks,” The Wall Street Journal , March 19, 2015.

20. Ng, Serena and Byron, Ellen, “P&G Exits Slumping BeautyBusiness,” The Wall Street Journal , July 10, 2015.

21. Silverman, Gary, “FT Big Read: Consumer Trends. Big US FoodCompanies Have Missed a Major Shift in the Nation’s Tastebuds asCustomers Seek Fresher Fare and More Exotic Flavours. Can theCompanies Find New ‘Bliss Points’ to Woo Them Back?” FinancialTimes , March 17, 2015.

22. Berfield, Susan, and Noah Buhayar, “Things Are About to Get Uglyat Kraft,” Bloomberg Businessweek , August 24–30, 2015.

23. Gasparro, Annie, “3G Brands Lose Share Amid Focus on Costs,” The Wall Street Journal , August 10, 2015.

24. Gasparro, Annie, and Maria Armental, “Revenue Weakens for Kraft,Heinz,” The Wall Street Journal , August 11, 2015.

25. Drucker, Peter Ferdinand, The Practice of Management , Harper Row, October 1954.

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37

5 Tendency 5: The Belief That What

Worked Yesterday Will Work Today

A restaurant brand team was worried about declining sales and customer transactions. So the team decided to run a promotion. The promotion was for a family dinner meal at a certain price. The team knew that five years earlier, this same promotion at the same price generated huge profits. So, now, five years later, the team ran the same promotion: same meal offering at the same price. The promo-tion did not work. Subsequent price elasticity research indicated that the brand’s perceived image and value had declined so much that the price of this family dinner meal in the current environment was perceived as too expensive. The brand was in such disrepair that a price deemed great when the brand was deemed great was no longer perceived to be a good value. Once the brand team understood that what worked five years ago was no longer a viable value, it found the proper fair price for the brand’s family dinner meal in the current, more challenging marketplace situation.

Customers change; the world changes; brand reputations change; and competition changes. Doing what once worked when the current landscape is different makes no sense. As this true story demonstrated, brands can change, too. The decline in brand value perception for this brand was so steep that the brand’s price elasticity had altered. Cus-tomers did not feel that the brand’s promotion was worth the price. As the brand’s robustness declined, its price sensitivity increased. The brand’s perceived value diminished in the eyes of its customers. Thinking that what worked yesterday will work today is inward look-ing. The brand misses what is happening now and what can happen tomorrow.

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There are some who believe that Coca-Cola is stuck in a time warp, continuing to do what it knows how to do: sell sugared, carbon-ated beverages. And the risk avoidance is reported to be huge: the weight of the New Coke fiasco of several decades earlier still guides decisions when it comes to the core beverage. 1 Coca-Cola has bought numerous water and health-juice brands, including Suja. But the recent word from CEO Muhtar Kent is to focus on selling the sug-ared Coke brand.

Starting in 2006, McDonald’s seemed to believe that the world stood still. Wall Street learned that the leadership would not allow McDonald’s to stray from its current course. The public McDonald’s statement was, “Our strategic direction will not change.” 2

When discussing the “doing what has always worked in the past,” many journalists and economists cite Peter Drucker. As the man with the great marketing insights, Drucker recognizes the pitfalls into which so many great brands fall when it comes to doing the same thing onward. His lessons include these:

• Environments change. Continuing strategies and actions thatcreated past successes will eventually lead to failure.

• Being defensive and unyielding will also lead to failure. Organi-zations must be willing to (quickly) abandon formerly success-ful approaches.

• Believe that change will happen and that sometimes the changewill be revolutionary. Enterprises should create the future bymaking changes even though it means “obsolescing the prod-ucts or methods of its current and past success.” 3

This is common sense. Standing still while changes rage around you is a formula for failure. In fact, the “doing what has always worked” strategy was the basis of a recent TedxGR talk. The précis of this talk was as follows:

“Only doing what worked in the past is a recipe for failure: Author and consultant Jorge Sa evangelizes the Peter F. Drucker approach to managing corporate growth and inno-vation through a focus on questioning established practices. Companies and institutions cannot afford the luxury of copy-ing the past, but must build innovation systems within their

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CHAPTER 5 • TENDENCY 5: THE BELIEF THAT WHAT WORKED YESTERDAY 39

WILL WORK TODAY

structure. Because resources are scarce, managers must plan abandonment of past practices in the way of hockey great Wayne Gretzky, who would skate to where the puck was going to be. ‘If we keep doing what worked in the past, we will fail,’ Sa said.” 4

Kodak is a good example of continuing on the path of least resis-tance. There was a time when Kodak film was ubiquitous. Consumers created Kodak moments captured on Kodak film. Business presen-tations were designed on Kodak slides. Paul Simon expressed the delight of Kodak color film in the song “Kodachrome.” 5 As reported in 2011, Kodak is a brand that had enormous success, so much so that it was unable or unwilling to adapt to the changing photographic environment. 6

As Stuart Crainer points out in his discussion of management “res-cues,” having a CEO and a management team that is able to change their minds and the corporate direction is a good trait to have. At some point, leadership must be able to say that it knows as much as it can know and is capable of making an informed judgment call, even if it seems to be a leap of faith. Crainer calls it being able to shred the already wisely designed plan and get down to work on another. 7

At the firing of McDonald’s CEO, Don Thompson, Holman W. Jenkins of The Wall Street Journal commented on doing the same old thing: “If there is a lesson for Don Thompson, it is that every organiza-tion keeps on doing what works until it no longer works. McDonald’s problems are eminently fixable. The idea that McDonald’s is doomed because fast food is passé is silly. The easiest part is to stop doing what isn’t working.” 8

Markets and customers change quickly. So companies must be flexible, agile, and quickly decisive. However, it is also important to have a leader who is willing to look outward rather than backward. Amazon may have started as the biggest bookseller, but it quickly evolved into a mammoth retail bazaar and then into a cloud-comput-ing offering. Google may have started as an information resource to help us be smarter. But it is now exploring capabilities in self-driving automobiles, aging, robotics, all sorts of technological innovation, and, of course, optics with Google Glass.

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Building a culture that is not afraid of letting go is critical. This does not mean giving up the enterprise’s core values. But it does mean being ready to take leadership in a fast-moving, changing world. Culture is an important part of making the Six Rules work. Staying out of trouble hinges on how willing the brand’s top executives are to recognize when it is time to move on and jettison a strategy that is holding the brand back.

Endnotes 1. Munshi, Neil, and Scheherazade Daneshku, “FT Big Read: Coca-

Cola. Sales Growth Is Slipping, Revenues Are Under Pressure andShareholders Are Growing Anxious as Changing Tastes Take theSparkle Out of the Company’s Core Brand. Can a Cost-CuttingStrategy Reverse Its Fortunes?” Financial Times , April 21, 2015.

2. Schmeltzer, John, and Delroy Alexander, “No Change in StrategyPlanned for McDonald’s; New CEO to Stay with Growth Plan,” Chicago Tribune , November 24, 2004.

3. Cruz, Elfren Sicangco, “FRAMEWORK; Business Lessons for2009,” BusinessWorld , December 2, 2008.

4. By Ellison, Garret, “Five Insights from the TEDxGR Conference,” Grand Rapid Press (Michigan) , May 10, 2015.

5. Simon, Paul, “Kodachrome,” Universal Music Publishing.“Kodachrome They give us those nice bright colors They give us thegreens of summers Makes you think all the world’s a sunny day I gota Nikon camera I love to take a photograph So mama don’t take myKodachrome away.”

6. State News Service , “Kodak Tries to Stay in the Picture,” October 4,2011.

7. Crainer, Stuart, “The 50 Best Management Saves,” ManagementReview , November 1, 1999, p 16.

8. Jenkins, Holman W., “Opinion: The Next McDonald’s Turnaround,” The Wall Street Journal , January 31-February 1, 2015.

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41

6 Tendency 6: The Failure to Innovate

Which consumer industry has seen new product development go through the roof with at least 700 new products in 2014? If you said, beer, you are correct. According to new U.S. data, “a new craft brew-ery opens every 16 hours on average.” 1 As reported by CEO Tom Long in the November 6, 2014, MillerCoors, SABMiller PLC Trade Update , “...more than 700 new brands have been introduced across the country so far this year. So it’s a really busy marketplace....” 2 Craft brewing, sub-brands, and brand varieties have completely altered the brew landscape. The innovation in a category that last innovated with “lite” beers has been staggering even if some of the innovations are new flavor offerings.

“We have delivered over 25% of all new brand volume within the beer category over the past year, and we are doing it with less than 2% of the new items. Now that is volume that scales and sticks and creates value for our distributors and our customers.

“...the Redd’s franchise grew double digits in the third quar-ter. Redd’s was up over 36%, and it is the fastest-growing brand in flavored malt beverages according to Nielsen. Next year we will...launch Redd’s Green Apple Ale featur-ing a crisper, tarter green apple taste. We introduced Redd’s Wicked Apple....Redd’s Wicked is a higher ABV (alcohol by volume) apple ale that is refreshing enough to lure drinkers back from wine and spirits...off to a great start. Next year, we will add...new flavors like Redd’s Wicked Mango. Smith & Forge Hard Cider is the first cider made to appeal to millen-nial men just launched this year, but is already the number four cider in the segment.” 3

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In an ever-changing, increasingly competitive marketing world, brands need customer-insight driven innovation to stay relevant. Innovations breathe life into brands. But not all innovation has to be an iPod or an iPhone. Some innovations are actually renovations.

Innovation is the development of new customer value through solutions that meet new needs, unarticulated needs, or old customer and market needs in new ways. This means offering different, more superior, or more effective products, processes, services, technologies, or ideas readily available to markets, governments, and society. Inno-vation differs from invention. Innovation means the use of a better and, as a result, a new idea or method. On the other hand, invention means the creation of the idea or method itself. Furthermore, inno-vation and improvement are not the same thing: innovation means doing something different (Lat. innovare : “to change”). It does not mean doing the same thing better. Innovation creates breakthrough products, services, and experiences, addressing individual problems or needs. Innovation is a higher risk activity.

The renovation process (remodeling or reimaging) improves the performance (look and feel) of existing products, services, and experi-ences. Renovation is a lower risk activity and should happen continu-ously. The technology industry is great at this process of continuous improvement.

Innovation and renovation are the lifeblood of a brand. These keep the brand relevant and contemporary and in sync with customer needs and idiosyncrasies. Innovations and renovations create news. As we mentioned previously, when companies pour money into divi-dends rather than allocating resources to R&D, they put brands in jeopardy.

CEO David W. Johnson masterminded a turnaround at Campbell Soup in the 1990s. He was heralded as a genius and savior. By 2000, Mr. Johnson faced an empty pipeline. As the press and observers indi-cated, the cost cutting and selling off of business units, which had stemmed the bleeding originally, would not be the way forward. A turnaround strategy is different from a growth strategy. Although Mr. Johnson countered the argument that he did a lot more than squeeze out every penny, the thinking was that he put minimal resources into R&D, providing only a pop-top can and ready-to-eat soups. This did

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CHAPTER 6 • TENDENCY 6: THE FAILURE TO INNOVATE 43

nothing to keep the brand up to date in the eyes of consumers, for whom the actual food ingredients mattered a lot. The company is “missing innovation,” said Gary Stibel, founder of the New England Consulting Group. 4

The food industry has always been in flux, evolving from canned foods to convenience foods; processed foods; frozen foods; natural foods; low salt, low calorie, low fat and no fat organic foods; gluten-free foods; and so on. It is wrong to say that all of a sudden, consumer desires have changed. However, there are brands in the food industry that have stayed complacent, living off of their past and not seeking to innovate for the future. When this happens, new brands come in and attract customers. Or customers look for different options in the grocery aisle or market-space.

Brands such as Campbell, Lean Cuisine, Kraft Heinz, Kellogg’s, and others should own the convenience food market. But the idea behind convenience has changed. Convenience is now more than easy to use. It is now about ease of choice, ease of use, and ease of mind. Processed foods with impossible-to-pronounce chemical addi-tives make it difficult to choose and do not put a consumer’s mind at ease. New companies that make meals for you and deliver are servic-ing those who want convenience and can afford to pay. Grocery stores and restaurants are servicing those who need more affordable options that are ready-made and take-away meals. Brands that promise all natural, non-GMO, low-calorie, gluten-free, soy-free, dairy-free, egg-free, and taste good are gaining share. Innovation is rampant in the food industry. Think about “Just Mayo” and “Beyond Meat.” But the brands that should be the goliaths are no longer the go-to brands.

The toy industry is another example of constant change. One of the companies that has struggled is Mattel. The lack of innovation slowed the company, and that is a death wish in a world that is based on an ever-evolving play experience. Licensing helps, but this is more of a renovation. The company has a new CEO (2015) who sees that the key issue is renovating Barbie to return her to profitability of her past heyday. One of the ways Mattel plans to do this is through a new innovation process, “...attempting to listen more carefully to consum-ers, and working with an outside company Quirky that enables the public to submit product ideas.” 5

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Sometimes innovation can go overboard, as the recent JCPen-ney experience demonstrates. Ron Johnson arrived from Apple and changed everything in the JCPenney shopping experience. For exam-ple, he walked away from offering continuous promotions, one of the JCPenney equities. As customers fled, Johnson lost his job. (Interest-ingly, Johnson was the choice of William Ackman, an activist hedge fund investor.) But Penney’s was not an Apple Store. Apple Stores promoted cutting-edge consumer technology that sold at full price. This was not the same customer frequenting JCPenney, where cus-tomers liked the promotions (Blue Light specials) thinking they were getting a great deal. Mr. Johnson went with what he thought would be compelling, without understanding the customer. The approach was unproven and untested. He said, “I thought people were just tired of coupons and all this stuff. The reality is all of the couponing we did; there was a certain part of the customers that loved that. They gravitated to stores that competed that way. So our core customer, I think, was much more dependent and enjoyed coupons more than I understood.” 6

Brand innovation is sometimes seen as a separate division within an organization rather than a galvanizing cultural force. To become an innovative branded culture, innovation must be a part of the enter-prise culture not apart from the culture. It cannot be the purview of one person or a small group of people. Innovation must become an everyday fact of life within the brand team. The branded innova-tions can be a product or a service but can also be a new system or a new way of measurement. Branded innovations must be designed to increase the brand’s value. W. L. Gore, 3M, Google, and Apple are examples of companies in which branded innovation is a cultural trait.

Endnotes 1. Daneshkhu, Scheherazade, “Craft Brewers Poised to Refresh More

Parts of the US, Artisanal Products Go Mainstream as They SpreadOut from Western States, Financial Times , August 17, 2015.

2. FD (Fair Disclosure) Wire , “MillerCoors Trading UpdatePresentation—Final,” November 6, 2014.

3. Ibid, MillerCoors Trading Update.

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4. Abelson, Reed, “The First Family of Soup, Feeling the Squeeze;Should It Sell, or Try to Go It Alone?” The New York Times , July 30,2000.

5. Whipp, Lindsay, “Barbie Has a Heroic Makeover to Face Off theNew Kids on the Block: Toymaker Mattel Plays with SuperheroTheme as Girls Seek Stronger Female Roles,” Financial Times , August 22–23, 2015.

6. Reed, Marlene M., and Rochelle R. Brunson, “J.C. Penney: AnOverhaul for the Overhaul,” Online Journal of International CaseAnalysis , Fall 2014, Vol. 5, No. 2 ISSN: 1548-5137, p.1.

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47

7 Tendency 7: The Lack of Focus

on the Core Customer

When we arrived at McDonald’s in 2002, one thing was clear: customers were fleeing the brand. Additionally, demographics were against the brand because women were having fewer children. It is more difficult being a “family and kids brand” when there are fewer families with kids. The bucket was leaking, and the brand was having trouble attracting new customers and keeping current customers. The brand’s core customers still visited McDonald’s, but not as frequently. And, “Research showed that the majority of McDonald’s most fre-quent customers did not favor eating at McDonald’s. They just went there because it was so convenient and so cheap.” 1

There are observers who believe that over the past decade McDonald’s lost sight of the core customer and what it is that the core customer loves about McDonald’s. McDonald’s apparent cur-rent focus on the so-called “fast casual” competitors such as Chipotle and Panera Bread resulted in the loss of core fast food customers to fast food competitors such as Burger King, Wendy’s, Popeye’s, and Chick-fil-A. While the traditional fast food competitors are growing, the preoccupation with fast casual restaurants as well as higher priced, more customized menus may price out the core customer. They are saddened by the quality and the taste of the core items. (The good news is that there are some recent actions that seem to demonstrate a revised energy behind offerings with core customer appeal, such as the Crispy Buttermilk Chicken Sandwich, improved taste of the hamburger sandwiches, and improved quality of the Egg McMuffin. And it is working. The new management team may have reassessed what makes sense for the base. All Day Breakfast, as we discuss in the online case, is also important to the core customer base. However, it

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is too early at this point in writing to learn if it is as strongly successful as originally hoped.)

Right after the management change that placed Steve Easter-brook in the CEO role, a reporter wrote the following. “The McDon-ald’s core customer, on the other hand, is still looking for a break: a $3.99 Big Mac, served fast. In fact, roughly two-thirds of its custom-ers order at a drive-through counter. If Mr. Easterbrook is trying to attract a more affluent, food-conscious customer, he is surely aware of all the ways McDonald’s has already stumbled on that path. Mike Donahue, who headed communications at McDonald’s from 1987 until 2006, points out that the company has tried a dizzying array of tactics to reinvigorate its business and shed its bad-food image, like new products, healthier options, lower prices, higher prices, store revamps and greater transparency, to little avail. ‘Now more than ever, the company is facing the perfect storm that is challenging its very relevancy,’ said Mr. Donahue.” 2

The number of brands that lost focus on the core customer and suffered because of it is long. But it is one of the areas to address when managing a brand turnaround. Lego is now considered to have weathered several bad periods, becoming a stellar example of brand revitalization. However, at times during its downturns, the brand became distracted. Top management expanded into areas beyond toys with the purpose of building Lego into a lifestyle brand. Lego grew its Lego theme parks and ventured into Lego software and clothing. “Not every one of these products flopped, but they created no end of corporate distractions—and caused Lego to neglect its core business. Instead of dreaming up new toys, executives were too busy designing apparel and eyeing theme-park locations. Sales slid sharply: from 2002 to 2004, revenue fell 16 percent, to $987 million, and losses stacked up like so many red-brick towers.” 3

In 2011, Wal-Mart fell into a hole sinking deeper than it or even Wall Street realized “when it cut back offerings at its namesake dis-count stores, a misstep the company is working frantically to correct through new management and a new plan that has it refocusing on its core lower-income customer.” Again, distractions from the core caused troubles. The brand began expanding and found itself with new competitors that it did not have on its radar screen. H&M, Uniqlo, along with Macy’s are selling hip fashion at affordable prices;

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CHAPTER 7 • TENDENCY 7: THE LACK OF FOCUS ON THE CORE CUSTOMER 49

Walgreens is selling food, and Target is expanding into fresh food. “They’re too big, they’re trying to grow too much, they’re trying to do too many things,” said David Strasser, an analyst at Janney Mont-gomery Scott. Observing Wal-Mart, Strasser was clear: “Wal-Mart had lost focus on its core customers, many of whom are subsisting on government aids such as unemployment payments and food stamps.” 4 Losing sight of the core customer and his problems, needs, and pur-chase occasions can be brand devastating. In some cases, the losses are so great that the CEO or at least the CMO is ousted.

As a reminder, in 2003, JCPenney fired CEO Ron Johnson for making sweeping changes to the entire Penney concept. Critics of Mr. Johnson’s overhaul were vocal: Johnson lost sight of the Penney cus-tomer who is a cost-conscious, promotion-loving shopper. By offering more expensive items and hacking away at daily and hourly promo-tions, Mr. Johnson not only lost current customers but also failed to attract new ones. With sales declining at a rapid, unhealthy rate, the Board showed Mr. Johnson the door. 5

There are reams of data to show the value of the core customer. In the early 1990s, research companies and consulting firms spent resources on understanding brand equity. Brand valuation and ways of measuring this were born. How much is this brand worth? How do we reflect this value on our company’s balance sheet? Seminal work by Frederick Reichheld on the lifetime value to a brand from a loyal customer changed the way brands provided service. His data showed that as brand loyalty increases, the likelihood of defection because of a competitive price promotion decreases. He concluded that reducing defections by 5% could increase profits by 25% and more. 6 Additional research that we (Arcature) conducted and analyzed indicated that loyal customers are eight times as valuable as those who just consider your brand. This is why a proper, viable Plan to Win (see Tendency 10: highlighting what happens when there is no Plan to Win), such as the one Cantalupo/Bell/Light created at McDonald’s, has this as its bottom line: create more customers who purchase more frequently, are more brand loyal, spend more, and are more profitable. Conduct core customer analyses to understand exactly who are the brand’s most loyal customers.

Losing a small percentage of core customers will account for a dis-proportionate amount of lost income for the brand. It will also carve

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into the brand’s image and reputation. Keeping track of defections and understanding what problems your defectors have with the brand are essential. Instead of asking people what they want, ask them about problems they have. In February 2015, we wrote an opinion piece about McDonald’s for The Wall Street Journal . 7 After its publication, we reviewed the online comments. Respondents provided more than 235 problems with the brand, ranging from the taste of the food, the quality of the service, and the cleanliness of the rest rooms to the wait times, the surliness of the crew, and more. True, it was a self-selected sample of Wall Street Journal readers. Wall Street Journal readers are likely a more affluent group who could afford customization at McDonald’s. Yet, none of the problems focused on the lack of per-sonalized meals that you create yourself. (See the McDonald’s online case for the problem list generated by our article.)

Endnotes 1. Light, Larry, and Joan Kiddon, Six Rules of Brand Revitalization:

Learn How Companies Like McDonald’s Can Re-Energize TheirBrands , Wharton, 2009, p. 80.

2. Strom, Stephanie, “McDonald’s Seeks Its Fast Food Soul.McDonald’s Is Having an Identity Crisis,” The New York Times , March 8, 2015.

3. Newsweek , “Building an Empire One Block at a Time,” April 16,2007.

4. Edelson, Sharon, and Evan Clark, “A Behemoth Stumbles: Wal-Mart Scrambles to Fix Stores,” Women’s Wear Daily , February 23,2011.

5. Tabuchi, Hiroko, and Rachel Abrams, “4 Different TurnaroundTales at Retailers Sears, Kohl’s, Gap and J.C. Penney,” The NewYork Times , February 27, 2015.

6. Reichheld, Frederick, The Loyalty Effect , Harvard Business SchoolPress, 1996.

7. Light, Larry, “How to Revive McDonald’s: With Fourth-QuarterEarnings Dropping 21% and Global Sales Down, the CompanyNeeds a Back-to-Basics Turnaround,” The Wall Street Journal , February 10, 2015.

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8 Tendency 8: The Backtracking to Basics

Sometimes the desire to keep-on-keeping-on with the same old ideas is called “getting back to basics.” Of course, there will be core elements of a brand that must be upheld. But these elements must always be kept current and relevant. This means these elements are renewed, refreshed, and refined for contemporary importance. Mat-tel is struggling with renewing Barbie. The doll has a great heritage, but how can she be relevant in today’s world without returning her to the basics that made her the woman she used to be? (Recently, The New York Times Sunday Magazine , September 20, 2015, ran an article about the artificial intelligence applied to Barbie: she now has a brain.)

Four years after Jim Skinner’s ascension to the CEO role, in 2010, Financial Times reported that McDonald’s was continuing to go back to basics: “...returning to basics proved a success for the accidental chief” (Skinner). 1 In fact, the decision to return to basics covered up the positive momentum Mr. Skinner inherited.

Things became worse since this remark from 2010. In 2015, CBS News reported: “McDonald’s has been making headlines lately, but for all the wrong reasons, sparking speculation that the golden years of the golden arches are over. Food industry analysts don’t think McDonald’s will go the way of the Woolworth lunch counter, Schraft’s, or the Automat. But, one of the most recognizable brands in the world is in decline and scrambling for a new strategy under new leadership.” The solution? In interviews, franchisees and advisers to restaurant owners say they hope new CEO Easterbrook will shrink McDonald’s growing menu to concentrate on the core products of burgers and fries.” 2

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Focusing on the core products is absolutely necessary. Just remind yourself of how remarkable the Burger King turnaround has been with its focus on burgers and fries in a culinary environment that is generating new burger and fry joints all the time. However, it is nec-essary to ensure that a concentration on the brand’s core is made rel-evant and contemporary. During our original work at McDonald’s, we recognized that to restore relevance, our brand’s core was still power-ful, but we had to change the way we articulated this to be contempo-rary. We changed our brand personality from the “child in every one of us” to the “young adult every one of us aspires to be.” We changed from “we are all children in our hearts” to “we are all young at heart.” We changed our brand image sweet spot from 7 years old to 22 years old because those who are younger want to be older, and those who are older do not want to be older. As an iconic brand, McDonald’s was perceived to have been around forever, yet with an ever-enduring youthful spirit. By maximizing both of these ideas, we were able to update the brand’s personality. We did not go back to re-create the past. We set the foundation for a new successful brand future.

Going back to basics has become common language for “we do not have new ideas, so we will go back to what we always knew until we have new ideas.” This is unfortunate. Basics are usually the gener-ics of the category and provide little or no differentiation. Basics are “greens fees” or “table stakes.” Basics are the types of undifferenti-ated, unspecified things that no one can be against. The fact is that basics are really the category defining features and functional ben-efits. And, your brand cannot compete if it does not deliver on the basic category-defining elements. Getting the basics right is necessary but not sufficient for brand differentiation. A brand must create a rel-evant differentiated brand experience. Basics provide the foundation.

Getting back to basics is often the message for a CEO looking for a message when things are looking pretty grim. It is the catch-all generic strategy that analysts accept with a head nod. So when Tesco, the UK grocery giant, admitted to a serious, brand-defeating crisis and brought in a new CEO, the response was getting back to basics. 3 This happened with Avon as well... a brand that is currently considering a sale. The previous chairwoman, Andrea Jung, “became a back-to-fundamentals CEO who pushed the company to focus on its well-regarded skin care and makeup...,” disregarding the newer

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CHAPTER 8 • TENDENCY 8: THE BACKTRACKING TO BASICS 53

fashion items and gifts. 4 This appears to be one of the problems fac-ing The Gap, a retailer that is struggling to compete against its closest competitors, Abercrombie, J. Crew, and newer entries such as H&M and Zara. Instead of seeking fashion trends that can be made relevant to The Gap wearers, the retailer continues to stay with a rather unex-citing, lackluster fashion approach but in “a dizzying array of choices.” Sticking to the basics that made it a go-to brand is not allowing it to move ahead and compete. The current CEO has stated that the brand once had glory but glory is ephemeral. 5 (As of this writing, The Gap now states that it is going to take a chance on some “fast fashion” options with small batches of these in some stores. 6 )

In some cases, back to basics can mean returning to those defin-ing, signature elements that may have been abandoned for something deemed newer and hipper. Recently, Microsoft released Windows 10. But in March 2015, when the company announced the impendingrelease, Microsoft explained some details about the need for Win-dows 10. “Joe Belfiore, a Microsoft executive who oversees Windowsdesign and evolution, said that the company was going ‘back to basics’with Windows 10, and confirmed that the famous Start menu, whichwas removed from Windows 8, would be returning. ‘We’re looking tofind the balance, so that all the Windows 7 users get a familiar experi-ence on the devices they already have,’ he said. ‘It gives the familiarityof Windows 7 with some of the elements of Windows 8.’ He said thatgoing from Windows 8 to Windows 10 is like going from a Prius to aTesla. ‘They don’t have to learn any new way to drive.’” 7

In July 2000, after suffering a third straight quarter of falling sales, a Campbell Soup Company press release announced a “back to basics” plan focusing on new varieties of the core product as well as packaging innovations and marketing increases. To implement this backtracking to basics, the company brought back David Johnson as CEO. He labeled the back to basics plan the “fight back” plan. By 2001, there was another new CEO. 8

One other piece that is problematic with “going back to basics” is that in our fast-paced, evolving world, basics change. Going back to something that may not be as needed anymore or is less desired or so out of date that it is no longer meaningful is brand defeating. For example, 10 years ago, free, unlimited Wi-Fi in a hotel was not

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a “basic.” Today it is. A list of hotel basics from 10 years ago would not include Wi-Fi. Does that mean going back to basics ignores this fundamental, expected feature?

Back to basics is not a strategy. Define a strategy for the future, not one to merely reproduce the past. What got the brand to where it is today will not get the brand to where it needs to be tomorrow. As part of the strategy, define what basic elements of the brand’s past are still relevant, how they should be kept up to date, how they can be improved. And define what elements of the brand’s past are no longer relevant.

Endnotes 1. Farrell, Greg, and Hal Weitzman, “McDonald’s Vows to Keep It

Simple: Returning to Basics Proved a Success for Accidental CEO,” Financial Times , December 14, 2010.

2. CBS News , “The McDonald’s Slump: Are Golden Days of GoldenArches Over?” February 28, 2015.

3. Ruddick, Graham, “Tesco Reveals £6.4bn Loss; Supermarket GroupReports the Biggest Loss in Its 96-Year History After Slump in Salesand Accounting Scandal,” The Telegraph (UK) , April 22, 2015.

4. Byron, Ellen, and Joann S. Lublin, “Lackluster Avon ExploresMakeover: Falling US Sales, Murky Strategy Force Beauty Firm toConsider Shift,” The Wall Street Journal , April 28, 2015.

5. Tabuchi, Hiroko, and Hilary Stout, “Gap’s Fashion-BackwardMoment: A Classic American Retailer Struggles to Catch Up withChic and Cheap Foreign Competitors,” The New York Times , June 21, 2015.

6. Kapner, Suzanne, “Gap Plans Fast-Fashion Test to Get a Jump onTrends,” The Wall Street Journal , August 21, 2015.

7. Griffiths, Sarah, and Mark Prigg, “Microsoft WILL Kill InternetExplorer: Company Confirms Browser Will Be Replaced by ProjectSpartan,” MailOnline , March 17, 2015.

8. Abelson, Reed, “The First Family of Soup Feeling the Squeeze:Should It Sell, or Try to Go It Alone?” The New York Times , July 30,2000; and Winter, Greg, “Campbell Soup Picks Chief, Playing DownTalk of Sale,” The New York Times , January 9, 2001.

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9 Tendency 9: The Loss of Relevance

What is most meaningful about the brand to today’s customers? What is it that makes the brand significant? In Scotland, relevance refers to a term meaning legally pertinent , while in Medieval Latin, the root of relevance is the word relevare for “raising up.” 1 Both make sense for brands. What makes a brand relevant is pertinent, and, as part of the essential Brand Promise and intellectual property, it can-not be tampered with. Relevance “raises up” a brand in a customer’s perception: raised up from the rest of the competitive set. As we will discuss in Part II, “The Six Rules for Brand Revitalization Revisited,” the restoration of relevance is critical for brand revitalization and turnarounds.

Staying relevant is one of the Six Rules. Staying relevant means always staying aware of changes to the landscape, the segments, the customers, the competitive brands, and your brand. Generating inter-nal excitement, energy, curiosity, and creativity keeps complacency at bay. Opening the doors to ideas from anywhere is essential.

“Ideas are a powerful resource. When an idea is unleashed, it can move mountains or governments. Ideas exist everywhere. It is arro-gance or jealousy when the ideas from outside of the brand center (or HQ) are rejected out of hand. Good ideas are everywhere. It is not the size of a country (or a county) but the size of the idea that counts.” 2 Accepting good ideas from anywhere keeps a brand relevant and out from under the covers of complacency. It allows the enter-prise culture to be up to date and desirable.

One of the critiques of the industrial food industry is the failure to see and take seriously the changing dietary habits of Americans. 3 The same can be said of the U.S. brewery business. Alan Clark, CEO of SAB-Miller, told Financial Times that the big brewers initially

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ignored the craft brewers. “We were too slow to recognize that the small players were ahead of the game. We thought the change in tastes would be short-lived, but now we are trying to reposition our-selves with an increased focus and investment on the craft sector.” 4 In November 2015, two big brewing giants, Anheuser-Busch InBev and SAB Miller, announced a potential merger, now under regulatory review. The hopes of both companies must be that being bigger will help with being better and stronger. It is assumed that in the United States, this merger will mean that SAB Miller will need to disentangle itself from Coors.

Campbell Soup is another company that attempted to ride the new wave of changing food expectations by early on attaching itself to customer desires for low sodium soups. However, as the CEO admit-ted to analysts, the extreme focus on taking sodium out and replac-ing it with sea salt created healthier but not very good tasting soups. 5 What Campbell failed to see (perhaps because the R&D folks were a separate department in a company of canners) was the surge in natu-ral, organic and fresh, and non-processed foods that actually tasted good. Somewhere along the way Campbell missed the fact that pro-cessed , canned , frozen not fresh , and artificially flavored were bad words. The company failed to see what was coming down the pike and failed to understand the changing definition of healthful . The brand is now working to catch up with foods that have fewer “unknown” ingredients to be perceived as more healthful. Campbell also failed to see the changing definition of convenience . Not understanding the current definitions of convenience is affecting the frozen food busi-ness as well.

Previously, we discussed the tendency to do what worked yester-day and the tendency to go back to basics. Both of these backward-looking tendencies exacerbate the ability to stay relevant. It is difficult to move forward while moving backward.

Campbell Soup Company went back and forth on the relevancy of condensed soup. In 1999, an analyst reported that the company decided condensed soup, the core, iconic product, would not be completely relevant to consumers. 6 In 2010, CEO Douglas Conant reported at an analysts’ meeting that he was convinced of the rel-evancy of condensed soup. “For nine years, we’ve been talking about

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CHAPTER 9 • TENDENCY 9: THE LOSS OF RELEVANCE 57

condensed. We have it today, and we are talking about a massive re-launch of condensed soup next year and solid performance of condensed soup this year. We have good performance in broth and soup. In over half of our soup portfolio, there is great news and great promise.” 7

Relevance is understood by learning about the customer’s needs and occasions that the brand’s product or service satisfies better than the competition. Then, there are only three claims for brand differen-tiation: superiority to alternatives, uniqueness, and better affordabil-ity. There is also the possibility that your brand captures and delivers against all three: a superior, unique, affordable option.

Needs-based occasion segmentation is a necessity. Industry clas-sification, price classification, and product classification do not reflect customer needs. For example, the automotive industry is adept at seg-menting the industry with language that customers never use— mid-size luxury , near-luxury , entry level —but no customer comes in to a dealership with these constructs in mind. The customer has a need. The customer wants a vehicle that can carry a group of kids and is appropriate for a night out with a significant other. Or the customer wants a sporty performance vehicle that is great for winding, country roads. Or the customer wants an off-road vehicle for winter weather.

The same holds true for the hotel industry. Even against the back-ground of the changing nature of hospitality, the hotel industry con-tinues to use terminology that defies customer needs. For example, ultra luxury , luxury , first class , mid market , premium , select service , limited service , extended stay , and boutique are titles of hotel seg-ments. Is this how customers plan their travel? Does any guest know the difference between a select service option and a limited service option? Does this mean that a boutique hotel cannot be a luxury hotel? What is the difference between luxury and first class?

Such industry, price, and category segmentations are not the tick-ets to relevance. These are certainly some of the reasons why Avon has suffered. There was a time in America when most women stayed at home and, with growing middle class affluence, wanted to learn about makeup and its proper application. There were fewer retail choices for buying makeup; drugstores and department stores were the only options. However, the environment for home sales changed

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some time ago: today shopping at home means online buying. Women are not home as much, and if they are at home, the carpools, spin classes, and after-school activities take up their free time. Sephora provides both an online and a shopping mall brand experience.

As we write this, lack of relevance is hurting The Gap. The iconic retail powerhouse that gave America khakis, denim jackets, and striped woolen hats has lost its mojo in a major way. The retail cloth-ing industry is changing as fast as American and global food tastes are changing. Observers say that The Gap is stuck in the middle with expensive fashion at one end (Chanel, Prada, Gucci) and discount clothiers (T.J. Maxx, Burlington Stores) at the other. But even more than this, The Gap has lost relevance with its core customers: teens and young adults. Uniqlo, H&M, and Zara now provide quick access to hip, with-it, inspired fashion at affordable prices. As the president of H&M stated, “If you don’t keep constantly updating your fleet, if you don’t have the right trends and collections season after season, your customers are just going to go somewhere else.” 8

Lack of relevance for the Coke brand is being leveled against Muhtar Kent, the Coca-Cola CEO. The global brand is in the midst of a burgeoning backlash when it comes to sugared, carbonated bever-ages. American data show that the food-related changes forcing recipe modifications at brands such as General Mills, Kellogg, Kraft, Nestlé, Mondeléz, and Frito-Lay are affecting beverage consumption to the same degree. With carbonated beverage sales falling over the past decade, it would seem that in order to stay relevant, Coca-Cola would push its non-soda brands while figuring out the best strategy for keep-ing Coke relevant. Not an easy task. However, by all accounts, this is not the way Mr. Kent looks at the morphing landscape. What is fasci-nating is the fact that for years Coca-Cola has had an occasion-based segmentation. Coca-Cola identified 30 customer occasions for bever-ages that is foundational to the brand’s merchandising strategy. Hav-ing this valuable information is essential for keeping the core product relevant. CEO Kent has a point in not abandoning the core product. But keeping it current with consumers’ altered dietary desires must be the task. “The big mistake is not realizing that the world has changed,” says John Faucher, J.P. Morgan beverage analyst. 9 And, as we tell our clients, needs-based occasion segmentation is foundational, but it is not a stone obelisk; it must be kept refreshed.

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Nestlé is struggling with its frozen food brands as the highly informed, demanding consumer turns to fresh, unprocessed, health-ier options with fewer and better-for-you ingredients. As frozen foods become less relevant, Nestlé is investing in fixing its frozen foods. The company is aware that it is not just about the healthfulness of the ingredients but also about the process used to prepare those ingre-dients. Furthermore, the in-home preparation of frozen foods—that is, defrosting and reheating—tends to change the taste of the meal in ways that do not compare to fresh. Consumers are walking away from “industrial” preparations.

When it comes to the company’s signature “diet” brand, Lean Cuisine, the changes are massive. The brand was recently reposi-tioned in the United States in an attempt to fight off the perception that it is heavily chemically processed frozen diet food. Nestlé admits that Lean Cuisine lost relevance not only because frozen is seen as less healthy, but because it focused on outdated ideas about weight loss and weight control. Increasingly consumers see organic, fresh, and freshly prepared foods as better weight management tools than low fat, low calorie, and tasteless varieties.10 Lean Cuisine is currently trying to reignite relevance with weight conscious customers through huge alterations to the range of meals and better-for-you ingredients and processes. Nestlé’s other frozen global entries are also being changed to match customers’ expectations and eating habits.

Understanding what your audience needs and how they obtain their products and services is the way to remain relevant. Knowing the relevant use occasions is an essential piece of knowledge. Some marketers are waking up to the fact that “occasion segmentation” is meaningful when making marketing decisions: how, when, or where a product is used is valuable information. Luiz Fernando Edmond is the chief sales director of AB InBev, the world’s largest brewer. Some of its brands are Budweiser, Stella Artois, and Corona. Edmond told an interviewer, “I don’t see craft (beer) as a negative thing at all. Craft can command a bigger price and create new occasions. It sells a lot into restaurants, into food occasions where wine used to be more prevalent. So, this is a big opportunity for us.” 11

When a brand loses relevance, it can come close to death. But there need not be a brand death cycle. The idea that a brand dies

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out over time is not inevitable. It is the result of poor brand leader-ship. With a keen eye to what makes your brand relevant in every day and age, a brand can innovate itself out of the death spiral. IBM may have lost its relevance in computers and laptops, but it saved itself by focusing on servers, information, and cloud computing. Motorola had mobile phones and walkie-talkies before any other brand, but it lost its edge in the consumer area to Apple, Samsung, LG, and BlackBerry. BlackBerry is trying to regroup by attempting a new track focused less on hardware and more on its patents and security offerings.

The CEO of Popeye’s, Cheryl Bachelder, recognized that the Popeye’s brand had lost relevance. The brand was tired and could not find a way to speak to its customer base in the ways it should. At the moment, the brand is performing beautifully. According to CEO Bachelder, this is because the brand is now focused on its rel-evantly distinctive Louisiana character delivering a positive brand experience. 12

Making the brand and its organization more customer-driven front-loaded with consumer insight helps keep the brand relevant. A brand cannot keep up with its customers’ changing tastes unless it continuously refreshes its promised experience. This means having a structured yet flexible strategy reflected in a viable and compelling Plan to Win.

Endnotes 1. Mac Air New Oxford American dictionary.

2. Light, Larry, and Joan Kiddon, New Brand Leadership: Managing atthe Intersection of Globalization, Localization and Personalization , Pearson, June 2015, p. 197.

3. The Economist , “Slimming Down: America’s Processed-FoodMakers Are Having to Adapt to Declining Popularity,” May 2,2015; Gasparro, Annie, “Changing Tastes Hit Food Sales,” TheWall Street Journal , October 31, 2014; Gasparro, Annie, “KelloggChases Changing Consumer,” The Wall Street Journal , May 6, 2015;Gasparro, Annie, and Erin McCarthy, “General Mills: ConsumersLose Appetite, The Wall Street Journal , September 18, 2014;Strom, Stephanie, “Mikey Doesn’t Like It Very Much, Anymore:

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Cereals Struggle as Tastes, Habits, Morning Rituals and American Demographics Change,” The Wall Street Journal , September 11, 2014; Leonard, Devon, “They’re GR-R-Ross!: Carbs, Sugar and Stubbornness Are Killing Kellogg, Bloomberg BusinessWeek , March 2–8, 2015.

4. Daneshkhu, Scheherazade, “Craft Brewers Poised to Refresh MoreParts of the US, Artisanal Products Go Mainstream as They SpreadOut from Western States, Financial Times , August 17, 2015.

5. Askew, Katy, “Focus: Campbell Renews Focus on Consumer Insightfor NPD,” Just-Food Global News , July 25, 2013; and Journal of theInternational Academy for Case Studies , “Campbell: Is the Soup StillSimmering?” May 1, 2012.

6. Pollack, Judann, “Campbell Loses Its Appetite for CondensedSoup; Dramatic Strategy Reversal Likely to Sink $50 Mil BBDOCampaign,” Advertising Age , January 1999.

7. FD (Fair Disclosure) Wire , February 22, 2010, Event Brief of Q22010 Campbell Soup Earnings Conference Call - Final.

8. Tabuchi, Hiroko, and Hilary Stout, “Gap’s Fashion-BackwardMoment: A Classic American Retailer Struggles to Catch Up withChic and Cheap Foreign Competitors,” The New York Times , June 21, 2015.

9. Esterl, Mike, “Coke Chief’s Solution for Lost Fizz: More Soda.Despite Changing Tastes, CEO Kent Doubles Down on CarbonatedDrinks,” The Wall Street Journal , March 19, 2015.

10. Whipp, Lindsay, “Nestlé Seeks to Defrost Growth in FrozenFoods: Group Bets on Shedding the Segment’s ‘Processed’ Imagewith $50m Research Centre,” Financial Times , July 22, 2015; andGretler, Corinne and Craig Giammona, “Nestlé Tries a DifferentRecipe for Lean Cuisine: It’s Ditching the Frozen Food Brand’sFocus on Calorie Counts; ‘This Is Not Going to Happen Overnight,’” Bloomberg BusinessWeek , June 29–July 5, 2015.

11. Ibid, Daneshkhu, Scherehazade.

12. The San Mateo Daily Journal (California) , “Popeye’s CEO onRivals, Why Deep-Fried Wins on Menus,” March 4, 2015; and FD(Fair disclosure) Wire , Popeye’s Louisiana Kitchen, Inc. at ICRXChange—Final, January 12, 2015.

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63

10 Tendency 10: The Lack of a

Coherent Plan to Win

Over the course of his McDonald’s CEO tenure, Jim Skinner repeatedly praised the brand’s Plan to Win as providing the direction that delivered quarter after quarter of rising revenues. The McDon-ald’s Plan to Win was the product of Jim Cantalupo, Charlie Bell, and Larry Light. It was crafted as the three-year blueprint for the McDonald’s turnaround. Before he died, Charlie Bell spoke multiple times about a Plan to Win 2.0 that would guide the brand past its successful turnaround. He understood that there is a real difference between a turnaround plan and a growth plan. However, over time many of the customer-focused elements of the Plan to Win were com-promised. Unfortunately, the Plan to Win evolved into an operational plan instead of a brand plan. The world around the brand changed, and the strategic plan lost touch with the changing consumer needs.

A Plan to Win is an aligning strategic one-page document that articulates the brand’s 8 Ps: Purpose and Promise; the critical five action Ps: People, Product, Place, Price and Promotion; and Perfor-mance. It is an essential part of any Brand Revitalization, as we have stated in both of our previous books. We will continue the discussion in Part II, “The Six Rules for Brand Revitalization Revisited,” when we look at the Six Rules Revisited. A coherent Plan to Win is the single most important guiding document for a brand. It is the docu-ment that outlines the direction for brand actions that will build brand preference and drive enduring profitable growth. It helps to define the action plans for each brand. And it defines the metrics that mea-sure progress toward the brand objectives.

Having a coherent strategy that aligns employees and outside partners accomplishes a lot on the way to positive performance. After

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the firing of Ron Johnson at JCPenney, the incoming CEO, Mike Ull-man, changed the strategic plan. In a year, the brand showed a quar-terly profit and demonstrated same-store sales growth even though the retail landscape was rough. The plan did not focus on cost cutting but on refocusing the brand on what made it great while refreshing this core with localization of styles, sizes, and climate differences. 1

IBM was in serious trouble when Lou Gerstner arrived in 1993. He altered the famed bureaucracy that at the time had 128 people with the same title of chief information officer. Gerstner jettisoned a previous plan that divided the company into nine divisions and focused instead on uniting the company under the IBM brand. He ensured that everyone at IBM focused on the IBM strengths of con-sulting and services. His dedication to the company and to having a coherent uniting plan laid the groundwork for e-business and the cur-rent cloud-based services offerings. 2

Similarly, we worked with Carlos Ghosn in developing and imple-menting the original Nissan turnaround brand plan in 2000. His three-year plan had aggressive goals, and he took some strong positions. But the company was losing millions of dollars every week and did not have a sense of urgency. He closed plants and fired employees, altering the Japanese tradition of a job for life. At the same time, he threw resources into brand-focused design and quality, hiring Shiro Nakamura as design head. Shiro Nakamura was someone who made every member of his staff learn the Nissan Brand Promise. Mr. Ghosn made a promise to the global business press and to dealers as well as employees that they would eliminate the huge incentives that auto-motive dealers used to negotiate with potential buyers.

One of the lessons we learned is this: the Plan to Win needs the clear, consistent, visual, and verbal support of leadership. The Plan to Win must contain the vision for the brand and the plan to achieve this vision. It is a top-down strategy. Without a clear and vibrant Plan to Win, a brand is directionless.

Such was the case of J. Crew during the years when finance-equity company people ran it and made Mark Sarvary CEO. Mr. Sarvary had worked at Bain & Company and, then, went into Nestlé’s frozen foods as president. He was originally made finance chief but soon decided he needed to make the decisions. With no knowledge of the fashion industry and fabrics, styles, and colors, he led the company

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CHAPTER 10 • TENDENCY 10: THE LACK OF A COHERENT PLAN TO WIN 65

according to what he understood rather than what was good for the customer. “He did not articulate a clear sense of what made J. Crew different from the dozens of other companies that sold chinos and sweaters.” J. Crew executives articulated their concern that there was no vision. And they complained that there was no plan for differen-tiating the brand from The Gap, for example. It took the entry of Millard (Mickey) E. Drexler to put the strategy together that made J. Crew a relevant and differentiated brand in 2003. 3

Campbell Soup did not fare well in its yearlong “back to basics” plan. New CEO, Douglas Conant, created a fresh, focused, aggres-sive plan that he called a “transformation” plan. His aim was to stabi-lize the condensed soup products by improving quality, changing the shelving at retail for a better customer experience, increasing market-ing expenditures, and addressing the pricing of their ready-to-serve products. Additionally, he focused on his employees through a pro-gram designed to build a superior management team. 4 Mr. Conant recognized and stated many times for attribution that to win with a strategic plan, a company needs a winning culture. 5

As referenced already, a Plan to Win needs to be kept up-to-date. It is a dynamic document that cannot remain static. The world we live in, and the customers who live in it, do not remain static. Keeping the Plan to Win current does not necessarily mean that the Brand Purpose or Promise needs to change. It does mean that the actions a brand must take to deliver against the Purpose and Promise will change. It also means that a brand may need to review some of its performance metrics to ensure that the right questions are asked. Planning ahead is great, but at some point, the “ahead” point is behind you.

In the past several years, the press has reported that McDonald’s needs to make headway with Millennials. Current CEO Steve Easter-brook believes that Millennials will favor McDonald’s if McDonald’s adopts a Chipotle “customization” platform. 6 If the Plan to Win had been kept contemporary, the understanding of the loss of Millennials would have changed the action Ps. And, the insights generated from updating the Plan to Win would show that Chipotle is much more than a customized burrito. Its core idea of Food with Integrity is com-pelling among Millennials. Under the banner of Food with Integrity, Chipotle has maximized 1) the idea of integrity of food sourcing with 2) the integrity of how employees are treated and 3) the integrity of

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responsibility for the community, the environment, and the humane treatment of animals. Chipotle demonstrates that not only does the food have integrity, but the ways in which this food is delivered and served to the customers have integrity and that all brand behaviors are guided by integrity. (The current food safety situation at Chipotle will test its Promise of Integrity as the company adds “integrity of food security” to its brand.)

To explain how galvanizing the Plan to Win was for Charlie Bell, know that he had an enlarged version of the Plan to Win on his office wall. He updated the metrics regularly. Managers would have to explain to him why the brand was failing or rising in their areas of accountability. The Plan to Win was a living embodiment of the brand’s turnaround. After two years, it was clear that the turnaround had been achieved. It was time for the growth-focused Plan to Win. The Plan to Win is not meant to be on autopilot. Leaders who believe they can operate without a Plan to Win or leaders who believe it is a bronzed tablet are mismanaging their brands and adopting a formula for failure.

Endnotes 1. Russell, Michelle, “In the Money: J.C. Penney to Shuffle Brands as

Turnaround Continues,” Just-Style Global News , March 1, 2014.

2. Investor’s Business Daily , March 27, 2001.

3. Kaufman, Leslie, and Riva D. Atlas, “In a Race to the Mall, J. CrewHas Lost Its Way,” The New York Times , April 28, 2002.

4. Branch, Shelly, “Campbell Slashes Lofty Dividend as Part ofTransformation Plan,” The Wall Street Journal , July 30, 2001;Johnson, Linda A, “Slower Soup Sales, Special Charge Cut CampbellNet Income 6 Percent,” The Associated Press State & Local Wire , November 12, 2002; FD (Fair Disclosure) Wire , Event Brief of Q12003, Campbell Soup Earnings Conference Call—Final, November13, 2002.

5. Brubaker, Harold, “Souper Saver,” The Philadelphia Inquirer , July 23, 2006.

6. Jargon, Julie, “Millennials Lose Taste for McDonald’s,” The WallStreet Journal , August 25, 2014.

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67

11 Tendency 11: The Lack of a Balanced

Brand-Business Scorecard

The goal of a Brand-Business Plan is to profitably manage cus-tomer-driven, top-line enduring profitable growth. A Brand-Business Scorecard reinforces the importance of producing a proper balance between both business and brand results. Using measurable mile-stones, it evaluates whether the brand leadership is doing the right things in the right way. From the brand side of the balance, the Brand-Business Scorecard must reflect the 5 Action Ps as written in the Plan to Win. From the business side of the balance, the Scorecard must reflect business metrics such as sales, profits, and share.

In 1996, Robert Kaplan and David Norton introduced an idea for a strategic measurement and management approach in their seminal book The Balanced Scorecard: Translating Strategy Into Action . They argued for a system in which all the key variables such as short- and long-term goals, financial and nonfinancial metrics, lagging and lead-ing indicators, and external and internal performance perspectives would be balanced. They described this as a powerful way to inter-nally communicate and galvanize the enterprise around the business strategy. 1 Our belief is that the scorecard is not truly balanced until it includes both the brand and the business measures.

Earlier we said that how you run your brand is how you run your business. The two are intrinsically linked. By separating brand and business, an organization will inevitably relegate brand to image and marketing, particularly advertising. When an enterprise refers to brand as all about media and messaging, it becomes a self-fulfilling prophecy that brand management will be seen as a cost rather than as an investment. It will be seen as media and messaging rather than

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business generator. Or the enterprise focus will be biased to the short term over the long term.

When an organization’s eyes focus on short term, innovation can become less urgent and pipelines can stay empty. A Brand-Business Scorecard (we will review in Part II) allows leaders to view all criti-cal indicators necessary for enduring profitable growth rather than profitable growth that is not enduring or enduring growth that is not profitable.

Many of our clients have created and implemented a Brand-Business Scorecard. Although it sounds so easy to do, it requires cul-tural acceptance and a willingness to deal with the results. Our discus-sion on collaboration in New Brand Leadership shows that in today’s world there must be a reassessment of accountability. It also talks about ceding certain responsibilities to others. If the brand and orga-nizational culture are not willing to accept these changes in account-abilities, then managers become unwilling to have their performance rewarded relative to the performance of others. The silo arguments take over. The egos take over. The enterprise is unable to create brand unity.

With one client, after implementing the Brand-Business Score-card, the entire rewards system changed, up through the CEO. The new rewards system is based on the performance measures in the Scorecard. With another client, however, the cultural alignment was so weak that brand leaders in select countries refused to be “held accountable” for the efforts of other brand leaders in other countries. They refused to have their bonuses tied to the performance of those they felt were inferior to them in terms of efforts. In fact, at one of these companies, the alignment never truly coalesced to the degree that one division would not even accept paychecks signed by the central brand CFO. They wanted paychecks signed by their business sector CFO.

Brand-Business Scorecards are emblematic of the culture of the brand and its organization. If the culture is against you, balanc-ing anything may become untenable. Cultural alignment is especially difficult when brands are merged. United Airlines is still suffering from a misalignment with Continental. The jury is still out on the US Airways/American Airlines alignment, although relations with pilots

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CHAPTER 11 • TENDENCY 11: THE LACK OF A BALANCED BRAND-BUSINESS 69

SCORECARD

appear to be settled and the merger of the two computer systems seems to have been accomplished with no glitches.

Unless there is cultural unity, the Brand-Business Scorecard can suffer. Although the Scorecard can be created and forced into the organization, over the years, we have never seen this approach win. Popeye’s CEO Cheryl Bachelder states, “We believe the culture of your company drives the performance results that you deliver. And, at Popeye’s, we call that purpose and principles. We believe we’re in the business of serving others, and therefore, our purpose is to serve and deliver performance. Our principles are how we do business. At Popeye’s, the culture of our company has been a differentiator in our performance results....” 2

Having a succinct Plan to Win is one key factor. The Plan to Win identifies the brand metrics that go into the Scorecard on the brand side of the balance. The lack of an up-to-date, customer-focused Plan to Win certainly impaired McDonald’s ability to keep abreast of market and social factors. The desire to keep a running succession of positive reports of earnings, buybacks, and dividends along with a stagnant Plan to Win undid the successful brand-business balance that had been in place during the 2002–2005 turnaround.

A Brand-Business Scorecard brings discipline. Prior to Carlos Ghosn’s arrival, Nissan was an undisciplined enterprise that was hem-orrhaging money. There was no sense of urgency. Tradition trumped everything. Silos were rampant, so accountability was hard to estab-lish. In many cases, what mattered were not the results of a meet-ing but the results of what was said after the meeting. Among many things, the implementation of a Brand Business Scorecard brought discipline to a disparate, slowly dissipating brand. The Nissan culture faced a culture shock. But the changes were immediately evident. A focus on metrics now mattered.

This is the principle that Gordon Bethune brought to Continental when he arrived in 1994. At that time, Continental was an undisci-plined mess. The brand had filed for bankruptcy twice. Its service was appalling. And, according to Mr. Bethune, Continental’s employees, across all functions, were embarrassed to work there, removing the Continental logo from shirts and uniforms. There was no scorecard. Mr. Bethune believed that “what you measure and what you reward

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is what you get.” As part of the scorecard, he reminded people that Continental was currently at the bottom of the punctuality table. He exhorted his troops to make sure that every month the brand was in the top half of punctuality: he would reward each one of them with a $65 bonus in addition to the profit share for the company’s financial performance. Not only did punctuality increase, but employees kept the brand logo on their uniforms. 3

The Brand-Business Scorecard tracks and reinforces the effect brand has on business indicators. When brand is relegated to just media and messaging, it is seen as less significant to overall perfor-mance results. This is not reality. 3G Capital bought Burger King because it thought the brand could be managed more profitably. 3G Capital has focused on the brand specifically combined with enor-mous financial discipline. Heinz and Kraft are valuable because of their brands. When the brands stop performing as they are now, ana-lysts worry. Whatever their motivation, analysts and shareholders see that how you run your brands is how you run your business.

Endnotes 1. Skapinker, Michael, “Interview: Gordon Bethune. Lifted by a

Change of Atmosphere: Continental Has Profited from the TheoryThat a Happy Worker Makes a Happy Customer,” Financial Times , October 15, 1998.

2. Kaplan, Robert, and David Norton, The Balanced Scorecard:Translating Strategy Into Action , Harvard Business

3. FD (Fair Disclosure) Wire , Popeye’s Louisiana Kitchen, Inc. at ICRXChange—Final, January 12, 2015.

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71

12 Tendency 12: The Disregard

for the Changing World

In the 1960s, tie-dye and long hair distinguished “hip” people from those in suits. In the 1970s, the days of Aquarian utopia melted into punk rock, disco, and a great miasma of funk. The environmental movement was born. Silicon Valley begat the Silicon Valley we know today. And so...the world turns. The local food movement with its small beginnings in the 1960s is now a food revolution. The small steps to hybrid vehicles in the late 1990s and into the early 2000s is now a significant part of the automotive world born in the environmental ideas of the 1960s. Mobile phones are ubiquitous. You can obtain any-thing you want online without ever leaving your laptop or phone. And, as John Kay pointed out in a Financial Times opinion, tapping on a mobile phone brings a cab, provides the value of one’s portfolio, and gives directions to a meeting. Tapping on that same phone offers the train schedule, the weather, a railroad ticket, or a boarding pass for a flight. 1 Although it is impossible to predict the future, it is absolutely necessary to keep your eyes, ears, mind, and heart open to what may be possible and to what is actually happening around you.

Recently, McDonald’s discovered that it was losing customers. The McDonald’s obsession with Chipotle forced the brand to focus on its indirect competition (brands like Chipotle and Panera Bread and premium burger brands like Five Guys and Shake Shack) instead of focusing on its direct competition (brands like Burger King, Wen-dy’s, Chick-fil-A). (McDonald’s recent introduction of the crispy but-termilk chicken sandwich appears to be a move to compete against Chick-fil-A.) While McDonald’s wrestled with how to reinvent itself as a “fast casual” brand, the fast food category grew and McDonald’s

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declined. The stated strategy is to be a “modern, progressive burger company.” Specifically, what does this mean? If fast, affordable, good-tasting burgers and fries are not popular, how is it that Burger King and Wendy’s are doing so well? Fast, affordable, good-tasting burg-ers—whether beef, chicken, or fish—and fries are not dying. Truly understanding the world around you should not take a backseat to your view of the world as you wish it to be.

The same questions can be asked of the industrial food and bever-age companies that are now wondering how they lost their grasp on people’s appetites. Campbell Soup has been working on soups with less sodium in formats other than condensed for some time. Frozen food options along with canned options have been losing eater com-mitment for decades with the availability of fresh or fresher foods. People did not just start drinking bottled water yesterday. Concerns about calories and fat have been top of mind since the late 1980s. Organic foods that actually taste good did not just appear last year. The environment for big, industrial food and beverage brands is so shaky that Target, under its new CEO, Brian Cornell, is telling food companies that off-trend, poor-selling products—regardless of aware-ness—will be demoted and will no longer receive the same strong marketing support. No idle threat, it is reported that beloved brands such as Corn Flakes are on the list, as are condensed soup and pro-cessed cheeses. In one of the biggest understatements of 2105, the CEO of Kellogg, John Bryant, said Kellogg needs to do more to keep cereal relevant and to stop the significant loss of interest and share of breakfast. 2

This is not only about the changes in what people eat and drink, but also about how, when, and where they eat and drink. As AB InBev admitted, occasions are important and are opening new doors to prof-itability. The 24/7 world is not a new thought. McDonald’s began 24-hour service during the 2002–2005 turnaround. Breakfast startedto become portable in the 1990s. Starbucks and Dunkin’ Donuts arenot new concepts. Kellogg recognized this changing breakfast situa-tion in the 1990s. Why does Kellogg still seem to be focused on a fam-ily breakfast occasion at home instead of focusing on the many wayspeople eat breakfast? Why is McDonald’s losing its breakfast cus-tomers to Taco Bell and to Starbucks? Will All Day Breakfast bringcustomers back to McDonald’s?

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CHAPTER 12 • TENDENCY 12: THE DISREGARD FOR THE CHANGING WORLD 73

In New Brand Leadership , we discuss some interesting “trends” that we see as having a tremendous effect on brands. Looking at just demographics, it remains startling that brands with reams of data do not synthesize from this information. Take Millennials, for example. Not all Millennials are the same. Even a brief perusal of the demo-graphic data shows that older Millennials and younger Millennials are different. What about the fact that our world is getting older and younger at the same time? Where are the strategies focused on these two very different demographic cohorts? We know that the older Baby Boomers are aging and the younger Millennials are growing in importance. And, we know that each cohort has sub-segments within.

The grocery chain Whole Foods is dealing with these demograph-ics right now. There will be a new brand for younger shoppers. It will be hipper, cooler, cheaper, and smaller. The new brand is a gamble, especially for analysts who see the new store concept as taking share away from the original brand. However, as founder John Mackey says, “You have to be willing to evolve with the marketplace. You can’t not do that because it might possibly take sales from your existing flagship brand.” 3 The Gap offered a cheaper, younger alternative, Old Navy, and now its sales and profits are the only bright spot in the trilogy of The Gap, Banana Republic, and Old Navy. The good news is that some analysts who follow retail see the possibility of a great new idea. Of course, it is a risk. But if it does work and charms Millennials, these analysts see a new growth avenue for Whole Foods. 4

Many of the troubles we discuss help generate this sorry neglect of the changing world. Not paying attention to the core customers and their changing wants and problems will mean the brand is not up to speed. Not innovating or renovating means a brand is not thinking about the present or thinking about the possibilities for tomorrow. Going back to basics by looking backward and trying to reproduce the past will not work tomorrow. Continuing to do what you know how to do means the brand is not evolving with the changing times.

Although we discuss the Twelve Tendencies for Trouble individ-ually, it is clear that these are intertwined. There is no order to the list. The best way to not have to revitalize a brand is to avoid becoming a troubled brand in the first place. As we say, brands do not have natu-ral life cycles. Brands do not inevitably die. Brands can live forever if they’re properly managed.

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Endnotes 1. Kay, John, “Miracles of Productivity Hidden in the Home,”

Financial Times , August 12, 2015.

2. Ziobro, Paul, “Target to Demote Some Food Brands,” The WallStreet Journal , May 18, 2015.

3. Gasparro, Annie, “Whole Foods Plans New Store Concept,” TheWall Street Journal , May 7, 2015.

4. Gasparro, Annie, and Jesse Newman, “Whole Foods: Now in TwoDifferent Flavors,” The Wall Street Journal , May 8, 2015.

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75

13 Break the LOCK on Brand Troubles

The Twelve Tendencies for Trouble are symptoms of four over-arching corporate and brand failures. These four failures essentially lock out the ability for a brand to turn around and generate enduring profitable growth. Before a brand can successfully revitalize, it must break the LOCK on

1. Leadership

2. Organization

3. Culture

4. Knowledge

Failure #1: Leadership

Without sounding trite, having a customer-and brand-focused leader and leadership team makes a difference. The change from Wall Street-focused Jack Greenberg to customer-and brand-focused Jim Cantalupo was huge. Jim Cantalupo knew that the brand needed resuscitation. He believed in his team. He handpicked Charlie Bell as his successor. Together, they led the way to the successful McDon-ald’s turnaround. Jim Cantalupo recognized that McDonald’s had to stop the bleeding of core customers. He stopped projects—including a multi-million dollar technology project—that were not only con-suming resources but also were taking immediate focus away from the McDonald’s brand experience. Both Jim’s and Charlie’s genuine love for the brand was contagious. There was no arrogant egotism but extraordinary energy for making the McDonald’s brand whole again.

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Many business writers and academics point to situations in which a company and brand are turned around based on the entry of a new CEO. Some of these are legend; some are just fully respected in the business world. Notable and visible CEOs Lou Gerstner at IBM and Carlos Ghosn at Nissan recharged the companies, revitalized the brands, and changed the cultures. Notable but less visible, Steve Kaufman at Arrow Electronics pulled together a company, culture, and brand shattered by a tragic fire that killed the company’s leaders and many employees. After several years of success, Kaufman real-ized that for Arrow to compete in a changing world, it was time to reinvent the company. And from his perspective, this meant possibly reinventing the electronic middleman industry. His view was that it was time to change the way Arrow thought about and managed its business. Arrow was not in trouble. It was not losing money; it was not suffering or losing ground. Mr. Kaufman just believed that from his vantage point the industry was at a tipping point and Arrow had to move ahead of the curve. The changes Mr. Kaufman instituted turned Arrow Electronics from a multi-million dollar business into a multi-billion dollar business.

Brands stay out trouble if the leadership sees ahead and creates a plan for winning. Brands need to keep innovating and staying rel-evant. Brands need to keep in touch with their customers. Brands need leaders who love the core products and who want to make these products even better. When the leader favors living off the brand’s previous success and momentum, and falls into a state of compla-cency, the brand suffers. When the leader favors new products at the expense of core products and favors incremental degradation of prod-uct quality for the sake of cost cutting, the brand suffers. When the leader creates a risk averse, inward-looking culture, the brand suffers. When the leader hides behind an “in the year, for the year” mentality, the culture will focus on short-termism. When this culture is arrogant enough to overlook a changing world with changing relevancies, the brand suffers.

The current energy around financial engineering and activist investors who want fast money makes you wonder about the state of corporate leadership. Some leaders know what needs to be done and do it. And some give in to making the safe, risk-averse decisions.

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CHAPTER 13 • BREAK THE LOCK ON BRAND TROUBLES 77

Some decide that pleasing the financial community with dividends and buybacks is more important than investing in the future of the brand. Is that leadership?

In many aspects, great leaders have all the qualities of great cor-porate brands. They are authoritative, credible, responsible, and trustworthy, and they have integrity. Great leaders inspire, influence, educate, support, and evaluate. Boards and shareholders should look for accountable, great leaders. If there is a focus on short-term prof-its, then the brand, organization, and culture will eventually suffer. But if the Board and the investors see the present and the future and want to build brands that will continue to generate enduring profit-able growth, they must ensure that great leaders are in place.

Failure #2: Organization

Is the entire company organized around the customer and the brand? Is it a collaborative organization? Is the silo mentality domi-nant? Are bureaucratic processes still getting in the way of effec-tive brand and business management? Are accountabilities clearly defined? At the basis of the Collaborative Three-Box Model described in New Brand Leadership is a reorganized approach to leading and managing global brands. Brands need collaborative organizations in which everyone clearly understands his role in brand building and knows what to do. Employees, regardless of function, need to know what their responsibility is and what they many have to do differently to behave on the brand’s behalf.

An organization that is ensiled, bureaucratic, or closed to cre-ativity hurts brand development. Campbell Soup was a company of canning engineers. The invention of condensed soup was a miracle of the canning process. It changed for the better the way we live. However, a 1979 article reported that at Campbell, employees were not encouraged to have original thoughts; everything was run strictly according to the book—a several inches-thick Manual of Procedures with rules on everything from ordering a new desk to disposing of a salesman’s used auto. 1 There were few organizational changes aside from firings until Douglas Conant took over as CEO. His focus on the

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internal organization was considered to be stellar and, for a company like Campbell’s, earth shattering. With an aligned organization, he was able to turn around the brand.

We discuss the benefits of an aligned organization in Part II, “The Six Rules for Brand Revitalization Revisited.” When the organization is stifling and risk averse, there is little openness, creative thinking, or forward looking. Rewards are based on being busy and for what can be accomplished at least cost and least risk.

When companies and brands are under pressure, they sometimes hire organizational consultants to rejigger the deck chairs. Many times, a company’s “reorg” does not address these tendencies for trouble but instead shuffles people around or re-segments the divisions. Reorga-nization will not address the fundamental cultural defects of the busi-ness. What the strategic vision is comes first. Then, what is the best organization to achieve that vision?

Failure #3: Culture

The culture of the enterprise reflects its achievements, its under-standing and appreciation of the achievements, its social institutions, and its people. The culture of the enterprise reflects its human capi-tal, its intellectual capital, its financial capital, and its trust capital.

Research shows that there is a link between culture and employee behavior. A culture that is focused on quantitative month-to-month results is risk and innovation averse. A tough, conservative, rigid culture is not conducive to creativity and brand development. It is essential that the values of the brand be reflected in the values of the culture. 2 A misaligned, out-of-sync culture that emphasizes brand demotion instead of brand promotion allows the tendencies for trou-ble to put a chokehold on brand growth. Culture counts. But if the tendencies take over, brand goes for takedown. When there is a con-flict between culture and strategy, culture wins.

Across all categories and industries, employee pride affects prod-uct and service quality. Proud employees will do their best to contrib-ute to business success. And business success reinforces employee

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CHAPTER 13 • BREAK THE LOCK ON BRAND TROUBLES 79

pride. When the tendencies take root, employees feel the restrictive-ness and negativity. If employees do not feel they are moving forward, the brand will not move forward.

Reviewing the Twelve Tendencies, it seems that all of these are the result of a culture that is not brand and customer focused. A static, stifling, short-term culture gives the Tendencies a great place in which to germinate. Many cultures give lip service to brand and customer. But in reviewing the performance metrics, it is possible to see whether the culture actually and truly means what it says. If brand preference is the stated goal but there is no measure of brand prefer-ence, the culture is not brand focused. If a company does not measure its brands’ satisfaction against competition, then the picture of success is not real. Metrics do not only show how the brand’s performance is measured; they show what things are valued and rewarded on behalf of the brand. The culture’s real brand proposition is revealed by how the culture intends to reward its people.

Failure #4: Knowledge

Leadership, organization, and culture all have a relationship to knowledge. Many of the Tendencies reflect a lack of knowledge or, worse, a lack of a desire for knowledge. Be a learning culture. When a culture is learning, deprived brands lose relevance, lose customer contact, and lose creativity. A collaborative, creative, open culture and organization with leadership that takes risk uses up-to-date informed judgment to build brands. Brands suffer when information and data are 1) hoarded, 2) not turned into quality knowledge, and 3) not shared globally (what we refer to as ROGL, or Return on Global Learning). Companies that cut back on investments in insightful information lock out any possibility of knowledge to keep their brands relevant. It is common to say that knowledge is power. To build powerful brands, make knowledge a competitive brand advantage. It is the responsibil-ity of great leadership to ensure that knowledge becomes the key for a brand enduring profitable growth.

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Endnotes 1. Gibson, Paul, “Win Some, Lose Some,” Forbes , June 11, 1979.

2. de Chernatony, Leslie, and Cottam, Susan Drury, “Interactionsbetween organisational cultures and corporate brands,” Journal ofProduct & Brand Management , 2008, Vol. 17 No. 1, p. 13.

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Part II The Six Rules of Brand

Revitalization...Revisited

In our 2009 book on the McDonald’s turnaround of 2002–2005, we shared six principles and their associated practices that under-pinned the disciplined revitalization approach McDonald’s and its leadership followed. The Six Rules of Revitalization are guiding prin-ciples for rejuvenating a brand and for creating a brand revitalization mind-set. Within each Rule are the practices that bring the Rules to life. Rules are important; they provide the beliefs, commitments, learning, and framework that bring thinking to life. But rules without actions are theory without throughput. That is why we outline the practices.

For The Six Rules book, we used the McDonald’s turnaround as the primary example. The McDonald’s turnaround was a highly praised business case, and the Six Rules are now embedded in many companies and executive education courses. In reviewing the original text, it is amazing to see how much the world has changed since our time at McDonald’s. However, in revisiting The Six Rules , it is as clear today as it was in 2009 that the Rules are still as relevant. Our research on big brands in trouble shows that those brands that have experi-enced turnarounds and growth have used some version of the Rules.

As we repeated in our discussions of the Twelve Tendencies for Trouble in Part I, the driver for Brand Revitalization, as for all brand building, is enduring profitable growth. Our goal is to attract more customers, who buy more often, who are more loyal, who spend more, and who are more profitable. This is the bottom line of a coher-ent Plan to Win.

Since 2009, our work and our observations of other brands have shown us that today, as then, by using these Six Rules and the

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rules-based practices embedded within, brand owners, brand manag-ers, and brand teams will see how to revitalize a brand while generat-ing a brand revitalization-centric mind-set. In the McDonald’s online case and throughout this book, we also show how McDonald’s walked away from the Rules and how it is now (at the time of this writing) a “big brand in trouble” working hard to revitalize and extricate itself from some years of decline.

However, we will also use other positive examples of brands to illustrate and demonstrate how this can be a winning approach. We are aware that the world is so different from 2002–2005 that many technologies and trends we now take for granted did not exist then. Further, we have developed other significant concepts since we wrote the original book and so we add these concepts to the Six Rules.

The Six Rules Revisited with the enhanced practices are as follows:

Rule 1: Refocus the organization— Financial discipline, operational excellence, leadership marketing, Brand Purpose and goals

Rule 2: Restore brand relevance— Thorough knowledge of the market, needs-based occasion market segmentation, Brand Promise

Rule 3: Reinvent the brand experience— Innovation and renovation, marketing, Trustworthy Brand Value Equation, fair value, total brand experience

Rule 4: Reinforce a results culture— Measurable mile-stones, balanced Brand-Business Scorecard, recognition and rewards

Rule 5: Rebuild brand trust— Internal/external, Trust Capital

Rule 6: Realize global alignment— Freedom Within a Framework, Plan to Win: Eight Ps, the Collaborative Three-Box Model

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14 Rule 1: Refocus the Organization

Refocusing an organization around common goals is the first step for brand revitalization. The key questions that employees have are 1) What are our Common Goals? and, 2) What is our Common Brand Purpose? The aim of the Six Rules is the creation of a coherent Plan to Win. People need to know what is going on and where they are going. Employees do not mind an organizational refocus, especially when the situation is in flux or is on a downturn. But they do expect to know in what direction they are rowing. Is the company on a road to financial health? Are we allocating resources to key areas? Do we all share the same vision for the brand’s future? Refocusing an organiza-tion requires organizational realignment behind improving financial discipline, dedication to operational excellence, leadership market-ing, and revitalized brand goals (purpose and promise) that redefine the brand goals. So, the four practices for refocusing an organization follow:

1. Financial discipline

2. Operational excellence

3. Leadership marketing

4. Brand goals (purpose and promise)

Financial Discipline

In tandem with a brand refocus, in 2003, McDonald’s leadership took an axe to the way the business was being run under Jack Green-berg. McDonald’s was growing by opening new stores every few

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hours. Instead of looking at organic growth, resources were spent on real estate, staffing, and all the other aspects of opening new restau-rants. There was diminishing faith that the McDonald’s brand itself was as viable and robust as it had been in the past. So McDonald’s invested in alternative ideas, including pizza, chicken, burritos, and sandwich restaurant brands. These distracted from the primary focus on turning around McDonald’s.

Immediately upon taking the CEO role, Jim Cantalupo announced a McDonald’s revitalization plan in which the goal was enduring profitable growth. The team’s first priority: “Right the Ship.” Finan-cial discipline was priority number one. The finance people told us that the focus must always be the bottom line. But, rightly so, Jim Cantalupo believed that there would be no enduring growth of the bottom line unless there was quality growth of the top line. McDonald’s had to change from being a supply-focused company to becoming a customer-focused company.

McDonald’s owned a selection of other fast food restaurant brands (called Partner Brands), and it had a lengthy list of blue-sky projects that were in various stages of implementation—none of which had anything to do with serving tasty, quality, affordable food fast. Mr. Cantalupo asked the leader of the blue-sky team, Mats Lederhausen, “to identify those businesses that could become significant without distracting management from its core business and to sell or close the rest. The result was that over the next few years almost all either were sold or shut down.” 1

In a brand revitalization plan, financial discipline is priority num-ber one. Get back to profitability by doing the following:

• Stopping the bleeding

• Eliminating waste

• Improving productivity

This is important: you need to earn the right to continue to grow. When a brand gets into trouble, organizations often focus only on reducing costs rather than on increasing brand value. The cost reduc-tion approach shows up the fastest on the balance sheet. Of course, eliminating waste and improving productivity are a continuing

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challenge. But cost cutting alone takes you only so far. You need plans, people, and actions that will deliver high-quality revenue growth lead-ing to enduring profitable growth.

Some companies and brands say they are focused on financial dis-cipline, but it applies to reorganization, cost cutting, and redundancy firings. Right now, Kraft Heinz Co. is reducing its head count and cut-ting costs under the banner of financial discipline. McDonald’s May 2015 less-than-exciting “turnaround” proposal connected financial discipline to a reshuffling of the deck chairs with a new “org” chart and the firings at its Oakbrook, Illinois, headquarters. In November, McDonald’s promised to borrow money to increase dividends and fund buybacks, a move cheered by Wall Street even though it would increase debt and has lowered McDonald’s credit rating. Campbell Soup Company defined financial discipline over the years as aggres-sive pricing.

The real commitment, understanding, and value of financial dis-cipline must relate to how the brand and the business are managed. Is your commitment to organic growth of the brand? Cost reduc-tion? Acquisitions? Resource-heavy projects with hard-to-understand brand value? David Lewis, CEO of troubled Tesco, was adamant in his statements regarding the remedies for the iconic British grocery brand: “It is an important part of financial discipline that we don’t enter into projects that we quite simply can’t afford.” 2 The Tesco plan cuts capital expenditures in what can now be seen as an undisciplined company that spent resources on unproven ideas and opening more stores.

Pierre Courduroux, Monsanto CFO, spoke about the importance of financial discipline. He said that of all the areas of focus, financial discipline is one in which the company has immense control. And he articulated the same balance of short term and long term as Mr. Can-talupo. Mr. Courduroux said, “So while we won’t lose the opportunity to invest in our pipeline and new platforms, we will match that with discipline across our cost base, with a priority on delivering our finan-cial results. Likewise, our new capital allocation approach provides us with more tools to leverage the strength of our cash generation and balance sheet while supporting our growth and returning value to our owners.” 3

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One of the Tendencies for Trouble is the desire to satisfy ana-lysts at the expense of the customer experience. This fosters the short-term/long-term, either/or debate, or as Jim Collins calls it, the “tyranny of the or .” 4 Today, because of the mergers, acquisitions, and activist analysts, many people interpret financial discipline as cost cut-ting only. Financial discipline translates to slashing all kinds of costs, large and small, such as firing employees, cutting back on benefits, traveling at the cheapest fares regardless of destination, bunking up in hotel rooms with cohorts, working with outdated equipment, and cutting back on innovation. Albert Dunlap (Chainsaw Al) took this approach. He decimated Scott Paper through enormous cost cutting.

Financial discipline is more than across-the-board cost cutting. Matt Paull, former McDonald’s CFO, was a strong proponent of understanding how to best allocate resources and then doing just that. Matt Paull recognized that McDonald’s needed to be better at resource allocation and improved productivity. He appreciated the importance of organic growth. He saw the need for resources invested in brand including updating existing restaurants, increasing the qual-ity of innovations, and refreshing the brand reputation.

Operational Excellence and Leadership Marketing

Along with financial discipline, there are the two drivers of quality top-line growth: operational excellence and leadership marketing. As Charlie Bell would say, leadership marketing gets people to the door. Operational excellence takes place in the store.

We define operational excellence as delighting customers with a branded experience so that an increasing percentage of them look forward to purchasing the brand more often. Operational excellence focuses on improving experience quality, restaurant environment, product quality, and service quality. Operational excellence involves creating an effective and efficient balance between meeting customer expectations and minimizing waste. Operational excellence decreases costs and improves customer satisfaction.

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Leadership marketing is about attracting new customers to the brand, encouraging current customers to purchase more often, and increasing customer loyalty. Having a foundation of strong financial discipline and a focus on operational excellence, the brand’s stage is set for effective marketing. Leadership marketing is not defined by how big you are; it is about how big you act. It means anticipating customer wants. Leadership is not determined by the size of the busi-ness; it is determined by the size of the ideas. It means innovating and renovating, not merely responding and reacting to competition.

The current restaurant industry continues to demonstrate that there is room for change, small and large. The competition changes frequently. Elements that were considered necessary are now some-times considered burdens. An example is size. Subway has more than 27,205 U.S. stores, which is just under the number of U.S. Post Offices (32,000) and almost double the number of U.S. McDonald’s stores (14,350). The ubiquitous sandwich shop is finding that size can create unwieldy problems, including difficulties increasing same-store sales. 5

Operational excellence and leadership marketing work. Pop-eye’s, under CEO Cheryl Bachelder, and Wendy’s, under CEO Emil Brolick, have leveraged these for turnaround success. As Ms. Bachelder said in an analyst meeting, “We do four things in order to be a growing chain. We must have a distinctive and relevant brand for our customer; we want to create a memorable positive experience for every guest; we want to grow the profitability of our restaurants for our owners; and as our lead developer says, if we do those three things we get the privilege of accelerating the growth of quality restaurants in the US and around the world.” 6

Emil Brolick also reinforced Wendy’s commitment to operational excellence and leadership marketing. Wendy’s developed programs for each of these, programs that have helped the brand move forward with franchisees and consumers. “We are pleased with the strong interest in our System Optimization strategy from new and existing franchisees, which is an affirmation of Wendy’s growth opportunities and brand transformation,” Mr. Brolick said. “Furthermore, we view this as an excellent opportunity to recognize franchisees that have demonstrated leadership in operational excellence, maintained strong

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balance sheets and have an expressed commitment to growth through our Image Activation strategy.” 7

In a 2003 document released to shareholders and analysts, McDon-ald’s CEO Jim Cantalupo highlighted the strategic turnaround plan. He made it clear that under this plan, the company initiated realistic financial discipline aimed at predictable financial performance. He underscored the strategies of operational excellence, leadership mar-keting, and financial discipline: “Right the Ship—returning McDon-ald’s to the operational excellence and leadership marketing for which we were once famous. Manage for financial strength—reducing capital spending compared with 2002 and using the money remain-ing after capital expenditures to pay down debt and return cash to shareholders.” 8

Ensuring that readers understood the new direction, on the first page of the open letter, Mr. Cantalupo made it clear that no one action alone is sufficient. McDonald’s approach was the combination of several actions working together but aiming in the same strategic direction: the enduring profitable growth of the brand, the system, and the investors.

Brand Goals (Purpose and Promise)

Over the many decades of reporting from Campbell’s Soup Com-pany, there is no mention of the purpose of the brand, except for commentary about increasing market share. There is thought given only to soup. It is all about growing the soup business. But soup is a category, and by emphasizing soup (for example, “Soup is good food”), Campbell helped customers think about all the competitors that were offering more relevant soup products. Kellogg’s went through a simi-lar approach in the 1990s selling the benefits of the breakfast occasion. It worked. But it did not build the Kellogg’s brand. People frequented Starbucks and McDonald’s for their morning coffee and foods.

Not having common, articulated, inspirational definitions for the Brand Purpose and Promise leaves the brand and its organization at a disadvantage. Why? Common brand-differentiating goals provide a motivating declaration of the brand’s over-arching mission. It is not

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an impossible dream. It is informed judgment defining a clear sense of direction. The brand must be in sync with the desired spirit of the organization. The Brand Purpose and Promise clarify the strategic vision for the brand. Purpose and Promise are the first two Ps of the Eight Ps in the Plan to Win. There must be associated metrics to assess the brand’s progress toward this future.

Brand goals can vary by brand. But in general, there are some key areas for defining the measurable milestones for progress. As a generality, we recommend that clients think about creating metrics that evaluate progress in whether the brand and the business are get-ting Bigger (more customers, more often, increased revenues), Bet-ter (improved customer experience), and Stronger (increased brand loyalty, market share, and profitability). At McDonald’s under Mr. Cantalupo and Mr. Bell, the goals were as follows:

• Be bigger by being better.

• Instead of growing by building more stores, increase customervisits to our stores.

• Increase brand loyalty.

• Improve profitability.

The Brand Purpose defines the brand’s reason for being (intent). When revitalizing a brand, there needs to be a renewed sense of pur-pose, a renewed sense of direction. IBM with Lou Gerstner’s guid-ance did develop such a statement with the e-Business direction. The essential element is not to be so generically uninspiring that the Pur-pose says nothing. For example, the previous McDonald’s statement of intent was “To be the world’s best QSR.” 9 Many people interpreted this to mean that McDonald’s mission was to be the ultimate “fast food” brand—fast and cheap. As part of the turnaround, the Brand Purpose became “To be the customer’s favorite way to eat and drink.”

The jury of analysts, reporters, and observers is still out on the current McDonald’s vision: to be a modern and progressive burger company. The vision was created in 2006 for the UK and is now appended to the global brand. Analysts do not seem to be going out of their way to parse it as their focus is earnings. However, it is important to keep in mind that the Brand Purpose is intended not just to provide

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direction, but also to galvanize an organization, including partners such as franchisees. To be “the best QSR” or to be a “modern, pro-gressive burger company”: is either of these a relevant, exciting, com-pelling statement?

Focusing on financial discipline, operational excellence, and lead-ership marketing, along with the galvanizing purpose with goals, is an effective way to eliminate silos and create a collaborative culture.

Endnotes 1. Campbell, Andrew, “Case Study: McDonald’s: How to Deal with

Slowing Growth. Be Cautious and Patient on New Projects,” Financial Times , January 6, 2011.

2. News Bites Finance , January 10, 2015.

3. FD (Fair Disclosure) , Q 4 2014, Monsanto Company, EarningsConference Call—Final, October 8, 2014.

4. Collins, Jim and Porros, Jerry I., Built to Last: Successful Habits ofVisionary Companies , HarperCollins Publishing Inc., NY, 1994,p 43.

5. Jargon, Julie, “With 27,205 Stores, Subway Gets Indigestion:Aggressive Expansion in US Leaves Chain with Crowded Footprintand Slumping Sales,” The Wall Street Journal , August 14, 2015.

6. FD (Fair Disclosure) Wire, Popeye’s Louisiana Kitchen Inc at ICRXChange—Final, January 12, 2015.

7. Progressive Media Company News , “The Wendy’s Company ReportsPreliminary 2013 Results, Issues 2014 Outlook, and Reaffirms Long-Term Outlook—The Wendy’s Company,” January 14, 2014.

8. McDonald’s Corporation , McDonald’s revitalization plan, October29, 2003.

9. QSR is the industry acronym for “Quick Service Restaurant.”

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15 Rule 2: Restore Brand Relevance

Remaining relevant in a changing world is critical to a brand’s health. Relevance is a key driver of purchase intent. Relevance means the brand is up to date and current in customers’ minds. Relevance means the brand is seen to be addressing current customer needs. Relevance along with differentiation is necessary for defining brand value. Is the branded experience I receive or expect to receive rele-vant and differentiated relative to other brands? The practices for restoring brand relevance follow:

• Thorough knowledge of the market

• Needs-based occasion market segmentation

• Brand Promise

Thorough Knowledge of the Market

Customers want brands to satisfy their needs. They want to believe that brands understand who they are and what their problems are. When brands lose relevance, customers perceive these brands as tired, out of step, and passé. Without relevance, customers think their brands are more interested in getting them to want and buy what the brands are prepared to supply.

Understanding what is relevant to customers begins a long time before creating or amending a product or service. It begins with stay-ing aware of what is happening: in the world, in specific countries, in specific marketplaces, with demographics, ideas, social and eco-nomic forces, technology, and communications. It also means having a healthy understanding of the role of your brand(s), its perceptions, and its reason for being. With this information, the brand can now

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focus on what needs to change, what needs to be refreshed, what needs to be updated, what issues can be leveraged, and what issues are barriers to success.

For example, the processed foods industry—from Kellogg to Con Agra—finds its products out of step with the eating habits of peo-ple in many countries around the world. The changing landscape is nothing new. Marketers who say that they “suddenly see the world is changing” are not quite credible. It is their job to know what is hap-pening around their brands. Values, attitudes, opinions, interests, and behaviors do not change over night. They change over time. Market-ers should never be caught by surprise. For example, there are chang-ing definitions of convenience, fresh, processed, and nutrition. There are the dynamic forces of globalization, localization, and personal-ization. Evolving demographics are predictable. Two demographic cohort bubbles now replace the familiar Baby Boomer bubble. With two extremely large age groups vying for resources, marketing is dra-matically affected: the marketing world is getting older and younger at the same time. 1 The signs of these changes have been here for decades: you need to look, listen, analyze, and synthesize. Opening a box of cereal used to be convenience. Not anymore. Canned and frozen vegetables used to be the perceived safe option: not anymore. “Cultural shifts don’t happen overnight. They build slowly—a sip of coconut water here, a quinoa purchase there, and suddenly the Amer-ican diet looks drastically different than it did 10 years ago.” 2 Williams Sonoma has been selling juicers and high-end blenders for years. It saw the desire for juices some time ago. Publix supermarkets in south Florida have had tofu and pressed juice sections for years. Burger King has a veggie burger on the menu. Staying relevant is a marketing imperative.

To maintain market relevance, we must do the following:

• Begin with having a thorough knowledge of the marketplace.

• Develop a true understanding of customer-defined marketsegmentation.

• Generate relevant insight into our customers’ behaviors.

• Prioritize the market segments.

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CHAPTER 15 • RULE 2: RESTORE BRAND RELEVANCE 93

• Using our knowledge and insights, define the Promise of thebrand to appeal to the prioritized market segments.

Information, data, demographics, and whatever is needed to develop a knowledge base are available everywhere. When we worked at McDonald’s in the first half of the 2000s, we created the knowl-edge base from the decades of market research conducted around the world. There was no common repository and little cross-geography sharing, so the collection process meant contacting each country and begging for reports.

Lack of knowledge and resistance to knowledge sharing are two common themes for getting into trouble. These are the result of bureaucracy, silos, and bristling arrogance, not wanting to change any-thing, and loss of contact with customers and the world. Information exists in a brand’s organization, but it needs to be released and used. Only when the information is available and utilized can it become part of a knowledge base. We call this ROGL, or Return on Global Learn-ing. Not sharing and releasing information for knowledge develop-ment is a brand and corporate waste of precious resources. Brands must think of learning as more than what is on a server, in the cloud, or saved to a thumb drive. Learning drives knowledge, which in turn drives relevance. Being a learning organization is more than an HR program: it is a mind-set that must permeate everyone who works on the brand. (Our previous book, New Brand Leadership , has a sec-tion called “Sharing Information Across Geographies, Functions, and Brands.”)

Externally, there is information everywhere. We live in an infor-mation-laden age in which data are generated each nanosecond. It would appear that there is no topic too small or erudite or weird for which there is no information. All this information will help in devel-oping a knowledge foundation for insight. Find it, interpret it, and use it.

Needs-Based Occasion Market Segmentation

The purpose of market segmentation is identifying and under-standing a brand’s customers. Viable, actionable market segmentation

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addresses several key areas to assist in directing brand-business strat-egy and brand policy. It can also help in managing resource allocation. Market segmentation requires craft as well as research skill. Contrary to what many academics, researchers, and consultants say, the output of a segmentation study does not reveal truth. In fact, it can raise more questions than you had beforehand. If analyzed and synthesized with intelligence and creativity, market segmentation can provide insight into the following:

• Superior understanding of the customer so the brand can pro-vide outstanding competitive advantage

• Strategic focus that is fundamental to effective marketing

• Identifying market priorities; effective market segmentationdrives business strategy, not just brand strategy

A proper market segmentation study should help you answer these three key questions:

1. Who are the prime customers and prospects?

2. What are their needs and problems?

3. What are the occasions in which these needs and problemsoccur?

What is a market segment? It is a specific group of people who share common needs in a common context. Product categories, chan-nels, and price categories are not market segments. There is no such thing as the granola bar market, for example. There is a market for portable, quick, and easy-to-eat nutrition. There is a market for an afternoon pick-me-up. There is a market for a healthy, attractive, and fit body. There is a need for portable protein before or after strenu-ous activities. There is a need for a non-messy, vitamin-enriched gym bag food.

We encourage our clients to focus segmentation on needs and the occasions in which those needs occur. Our advice is to conduct needs-based occasion segmentation. This does not mean we forget about who has these needs in specific occasions. What it does mean is that we have a going-in hypothesis about what is important in the category. It means avoiding price segmentation, industry segmentation, product

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segmentation, and channel segmentation. All these provide generic manufacturers’ viewpoints rather than customer-driven realities.

In a 2014 analyst Q&A, MillerCoors talked about the way it sees the beer landscape. First, it discussed the premium beer category. Next, the company defined a price category. It mimics the kind of thinking seen in the automotive industry. Then the company spoke of the craft beer segment. According to MillerCoors, there were more than 700 entries in the craft beer segment. 3 These craft beer entries must have something going for them in terms of relevant differentia-tion. But you would never know this from the MillerCoors remarks because their categories are just industry classifications. Research suggests that people drink beer based on needs, image, and occa-sions. The beer a person drinks at home watching a sports event is different from the beer consumed at a stadium and is different from a beer ordered at a nice restaurant during a business meal. Today, there is a growing desire for a connection to localized recipes, tastes, and ingredients and hand-made, nonindustrial, natural, “crafted” bever-ages. The AB InBev previous comments we quoted highlight the dif-ferences when viewing brands from a manufacturing view and a user view of the market.

If Levi Strauss had needs-based occasion segmentation, it might have moved faster when the yoga clothes craze began. Customers want a comfortable, yet stylish outfit for yoga. But the wearer also wants a comfortable, body-revealing, stylish outfit for wearing to the yoga class, after the yoga class, and on weekends doing errands . Casual, chic, comfortable, colorful dressing is not just for yoga; it is also relevant for occasions such as going to the bank, driving the car-pool car, having lunch with friends, taking strolls with family, and par-ticipating in gym classes.

Satisfying customer desires and understanding the occasions in which these occur is the key differentiator between marketing and selling. Selling is about convincing customers to buy what we know how to provide. Marketing is about providing what we know cus-tomers want or might want or that satisfies their problems. Superior understanding of consumer needs and occasions provides the basis for outstanding competitive advantage.

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Occasion-based, needs-driven segmentation is fundamental. We devote time discussing it in both our previous books. Market segmen-tation is essential, especially when trying to restore brand relevance. Segmentation creates a customer-driven map of the category divided into 1) what the needs are, 2) who has the needs, and 3) in what occa-sions this person has these needs. Knowing the audience, knowing the need, and knowing the occasion are all important. The challenge is to integrate this three-dimensional view of the market into brand-focused, complete market segmentation.

Our approach focuses on why the customers use. What are the wants underlying usage? What are the problems with what they cur-rently use? Then we define the context ( how, when, and where ) in which the need exists, and we look at who are the people who have these needs in these contexts. This is called “profiling” the segmenta-tion. The space defined by the intersection of who x why x context is customer-driven market segmentation.

The information provided by insightful market segmentation helps direct brand policy, marketing strategies, and resource alloca-tions. It helps identify priority areas for innovation. It supports defin-ing your competitive set sometimes in ways that are different from what you currently believe. Effective market segmentation drives business strategy, not just brand strategy.

During the Holiday season in 2014, The Wall Street Journal reported on how Campbell Soup segments people based on the con-tents of their refrigerators. The purpose for this segmentation is to guide marketing efforts—advertising and promotional offers—over the holidays.

Here is the Campbell refrigerator-contents segmentation:

• Passionate Kitchen Master— Red peppers, kale, and organicapple cider vinegar drink show this cook isn’t afraid of odd fla-vors or lots of chopping. These chefs put their own spin on reci-pes and love how-to cooking videos.

• Familiar Taste Pleaser— They cook to please others. Theystock flavored coffee creamer, fruit puree pouches, and pep-peroni to appeal to each family member’s preferences.

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• Familiar Taste Pleaser, Mexican— Tortillas, cheese, and several varieties of juice fill this fridge. Mexican-Americanhouseholds often do a lot of home cooking, Campbell researchshows.

• Constrained Wishful Eater— These cooks are interested infood but are prone to panic about what to make for dinner.Quick, child-friendly products populate the fridge, includingLunchables.

• Disciplined Health Managers— Low-fat cheese, egg whites,and green juice show this cook always considers health. Theylike to cook, but a health problem usually jolts them into thisgroup.

• Uninvolved Quick Fixer— You’ll find pizza boxes, take-out,beer, and snacks in their kitchens. They don’t enjoy cooking andwould snack for every meal if it weren’t for family obligations. 4

It is terrific that Campbell segmented customers. However, this view of the segmentation focuses on what they have but does not look at why they have it, what problems they have, and for what kinds of occasions they have these items. Nor does it provide insight into who these people actually are. The Campbell study is product segmenta-tion, not market segmentation.

In Part I, “The Twelve Tendencies for Trouble,” we discussed the automotive industry’s and the travel industry’s troubling tendency to rely on industry classifications. It is divorced from customer think-ing. In articles on the P&G sale of its beauty business to Coty, one reporter commented on how difficult it was for P&G to find a place for the beauty brands and how to define these brands. Apparently at one point, the beauty brands were included with the Gillette and Braun shaving brands and segmented as “men” and “women” catego-ries. This approach lasted only two years. 5

As we said, market segmentation is more than math; it is also craft. A more creative, yet potentially powerful market segmentation based on needs and occasions versus the standard industry version appeared in a travel piece written in the Financial Times . The author believed that the travel industry, including guidebooks, makes the mistake of

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dividing destinations into segments such as “outdoor fun,” “family adventure,” “culture weekends,” and “island hideaways,” when in fact what we really want are destinations that “connect us with what we are really searching for. We are badly served by the travel industry, which cuts the world into material categories almost entirely unat-tuned to the needs of our inner selves, or to put it more grandly, our souls.” The travel industry should perhaps think about destinations that reflect the inner desires that makes us love travel in the first place: I want to enjoy a complete sense of calm, I want to gain a sense of perspective on the world, I want to heal myself, I want to feel a sense of grandeur or understand the fleeting of civilizations. 6 This may sound far-fetched, but think about the segment of “get-aways” and then think about exactly what you might be getting away from. This type of perspective and creativity can change a standard industry approach to a customer-driven approach relating market segments to human desires and problems. It is a shame that travel, which is such an emotionally packed, experiential category, falls back on price-point, industry segmentation.

The constructs and processes we discuss and have implemented with many clients are not confined to consumer package goods. It is easy for durable goods and industrial/manufacturing or engineering companies to say that something like segmentation is not applicable to their industry. However, this is not true.

In the business-to-business (B2B) area, the main approach seems to be “segmenting” businesses by size, revenue (“size of the prize”), or number of employees: for example, assessing business needs by revenues and number of personnel, and setting cutoffs for categoriza-tion into so-called small, mid-size, and large businesses. The simplic-ity of this is good; it is easy to implement. However, small businesses differ in terms of sophistication, focus, problems, and needs. As ABA Bank Marketing reported, the size/employee segmentation not only has shortcomings but also results in frustrated, unhappy clients. The recommendation is to segment by needs. And as part of the needs-based segmentation, ABA Bank Marketing recommends that banks assess the lifetime value of the small business customer and use this as well in the needs evaluation. 7

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Brand Promise

A Brand Promise summarizes in a brief statement the special con-tract that exists between a brand and its customers. It describes what the brand is intended to stand for in the mind of a specific group of customers or prospective customers. By consistently living up to and delivering the Brand Promise, a brand will be relevant and distinctive. A Brand Promise is something that a brand continuously strives to achieve. It is a future-focused description because it states what the brand will do for its customers.

A Brand Promise has three components: the Brand Claim, the Brand Character, and the Brand Support. Originally, we defined the Brand Claim as the combination of functional benefits and emotional rewards: that is, “what does the brand do for me?” and “how do I feel when the brand does this well?” But the world changed. One of the most prominent changes is the new definition of “social.” Social is not just a way to define a type of media. There are significant personal benefits related to “social.” Some of these come from the connected-ness and interactions of sharing and social media, whereas others have to do with the need for respect, identification, social standing, and status. Social benefits are now so important that we define the Brand Claim as functional benefits and emotional and social rewards.

The Brand Character reflects the values of the customer (who is the person we wish to have as a loyal customer?) and the brand’s per-sonality (if the brand were a person, what would be those traits most compelling to the target customer?). We define Brand Support only after the Claim and Character are identified. The Brand Support is the combination of relevant, differentiated features that are necessary to bring the Claim to life for those with the articulated Character.

The role of the Brand Promise is multidimensional. First and foremost, it defines the brand. It defines the parameters for all devel-opment, communications, innovation, and renovation on behalf of the brand. It must be a motivating, relevant, differentiated description of the brand experience that you want the brand to deliver. Consistently living up to this Promise is the way customers perceive the brand’s performance quality. But the Brand Promise is an internal force as

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well. All employees must know and understand the Brand Promise. They must be able to define it and deliver it, day after day, for every customer. Regardless of function, employees must know what they need to do to live up to the brand’s Promise to its customers.

When we worked with Steve Ells and his team at Chipotle, we spoke to employees from cashiers to managers. It did not matter how long an employee had worked at Chipotle: each could define what Ells meant by “Food with Integrity.” It was inspiring. And it is a les-son in having both a clear, consistent Promise that is precise in mean-ing and language and an educational process that teaches employees about the Promise.

We once worked with an industrial client that had an idea about an interactive service to work in tandem with its consumer durable goods. Substantial resources were committed and spent, people were hired, office space was rented, a logo was designed, and external part-ners were secured. After all of this and a year’s worth of trying, not a single member of this team could define the relevant, differentiated Promise this service would deliver. And no one could articulate what a customer would actually get on day 1 when she purchased the prod-uct and service. The project disbanded at incredible financial loss for the client.

Defining the Brand Promise is an important strategic step for revitalizing brand relevance. But to communicate this idea to the organization, it is a good idea to find a shorthand way of stating it. This shorter articulation can instantly provide a tonality and attitude to all employees, all communications, and all restaurants and their own-ers. This is the Brand Essence. It must capture the motivating intent of the Brand Promise and in many ways becomes the way everyone involved refers to the brand and its promise.

Forever Young was not only a shorthand description of the McDonald’s Brand Promise (its Brand Essence) but a rallying cry for the one million plus employees around the world. After 2005, the description was never used to its fullest. And then it was ignored. It did not inspire People, Product, Place, Price, and Promotion. It was not refreshed and does not seem to have ever regained the power that it infused into all elements of the brand. Lewis Lazare of the Chicago Sun Times captured the lack of brand enthusiasm—lack of

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Forever Young-ness—as follows: “Since October, McDonald’s had been keeping Mary Dillon (the new CMO who replaced Larry Light) under wraps until Monday when she was brought forth to discuss the meager and uninspiring campaign for the upcoming Winter Olym-pics in Turin, Italy. Sadly, our first brush with Dillon was eerie in the extreme as we sat and listened to a recitation for a five-minute statement on the advertising strategy. But perhaps Dillon’s perfor-mance was merely a reflection of what McDonald’s is rapidly becom-ing under its new leader, Jim Skinner—a faceless pre-programmed behemoth intent solely on keeping those sales figures growing at an acceptable pace.” 8

It is a mistake to believe the Brand Promise is a mere marketing construct. Not only does it define the total brand experience, it is a galvanizing force within the brand’s organization. And, at this point in time, none of the press has been able to articulate what the Brand Promise for McDonald’s is. There is no mention of the Brand Prom-ise assuming the Brand Purpose is to be a modern progressive burger company, of which, by the way, there must be several dozen these days.

Brand Promise is not just a consumer-goods construct. In Febru-ary 2015, the Process Systems Business Unit of Saint-Gobain Per-formance Plastics reorganized product offerings, changing its brand portfolio to better serve the needs of its global customer base. The stated aim of the initiative was to align the Process Systems’ business with its evolving global customers’ needs. The worldwide marketing director of the Process Systems Business Unit, Raymond Pace, said, “Our new brand portfolio enables us to clearly communicate the value and brand promise we provide to our customers, which includes pro-viding peace of mind and building trust with them.” 9

In the late 1980s, after its privatization by the Thatcher adminis-tration, the British Airways (BA) brand reinvented the trans-Atlantic flying brand experience. Under the stewardship of Sir Colin Marshall and a first rate marketing group, the brand made some big decisions about how it wanted passengers to feel about the total brand expe-rience throughout the entire customer journey. The concept went beyond sprucing up the in-flight services. First, this meant creat-ing a Brand Promise for each service class, including the Concorde.

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Second, the team recognized that there is only so much that can be done in-air after people are fed and settled in for the flight. There is limited space and a limited number of amenities that can be deliv-ered. The eastbound flights to the UK tended to be overnight flights, so most people tried to sleep. With this reality, the focus turned to the on-ground experience, particularly the branded BA lounges. Start your journey by experiencing BA’s hospitality before you even step into the plane; differentiate the classes of service by lounges that pro-vided differentiating levels of catering. Third, the decision was made to focus on highly profitable business travelers who had to travel fre-quently cross Atlantic for business.

A 1993 BA booklet defined the Brand Promises for business trav-elers with the new business class, first class, and Concorde class ser-vices. Available in the lounges at that time, here is how BA defined each service class:

1993 BA Booklet: Step into a new world, It’s the Way we make business travellers feel that makes us the world’s favourite. 10

Welcome to the future .

We’ve created a new world for business travellers. Increased service. Greater comfort. More freedom. They are yours to experience in the new Club World, First Class and Concorde. Arrive in the right frame of mind to do business. Step into our world.

• Club World (Business)

Brand Essence: Time to think. Time to relax.

Why? Because you need time to prepare yourself for business.

We offer you a new world of service and comfort in ClubWorld—in the air and on the ground.

• First Class

Brand Essence: Space to sleep. Space to unwind.

Why? Important decisions affecting your company’s future?Sleep on them.

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Our First Class service is now truly in a class of its own. We give you space to take time out from your hectic business life. We give you time to reflect before you act.

• Concorde

Brand Essence: Speed—the conquest of time.

Why? Concorde recognizes the value of your time.

Concorde creates more time for you. Depart London10:30am arrive New York 9:20am.

The booklet provided all the details on the long list of differenti-ating features for each service class. It is an amazing fusion of Brand Promise, market segmentation, and communications. Through in-flight and on-the-ground innovations and renovations and through exceptional and insightful marketing, BA changed the customers’ per-ceptions of the BA brand experience, which in turn altered custom-ers’ perceptions of the brand’s value. (All of this had a huge impact on the way people traveled internationally, regardless of airline.) Once Sir Colin Marshall retired, the cost cutting began, and today’s BA is a service shadow of what it once was. But for more than a decade, the BA branded experience was exceptional. When you purchased a class of service on a BA flight, you knew what to expect, and it was consis-tently delivered.

Brands are promises of relevant and differentiated experiences. The total brand experience (functional, emotional, and social) is what defines the relevant distinctiveness of the brand.

There are financial as well as social consequences when a brand does not deliver on its Promise. A recent Gallup poll of 18 million consumers showed that more than half of the sample believes the brands with which they do business do not deliver on Promises. Here is what Gallup reported: “Brand promises matter to customers—and Gallup research shows that they have a profound impact on business outcomes. The highest-performing companies in Gallup’s database deliver on their brand promise 75% of the time, according to their customers. These companies have greater levels of customer engage-ment, which enables them to surpass their competitors in terms of share of wallet, profitability, revenue and relationship growth.” 11

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Additionally, Gallup provided further support for properly creat-ing and then using a brand’s Promise: “Gallup’s analysis also shows that only 38% of customers are fully engaged. Fully engaged custom-ers have a strong emotional attachment to a company. They’ll go out of their way to locate a favored product or service, and they won’t accept substitutes. As true brand ambassadors, they are a company’s most valuable and profitable customers.” 12

Market Segmentation and Brand Promise are intrinsically linked. The Promise of your brand must satisfy the needs/address the prob-lems of the customers in a particular market segment with a relevantly differentiated brand experience. Sometimes marketers assign the seg-mentation to the market research team and the Promise to the brand team. Even when there is shared information, bureaucracy and silos with a culture that is not conducive to collaboration will get in the way of success.

Sperry, the world’s first boat shoe creator, is an example of how segmentation and Promise work together. In February 2015, Sperry announced a new brand campaign tied to market segmentation and a brand positioning within that segment. The campaign refreshes the original idea that its founder, Paul Sperry, had in 1935.

His “inventive spirit inspired adventurous souls who strive to live life to the fullest.” It is an idea driven by his philosophy that we should treat every day as an odyssey. The new campaign is called Odysseys Await™ that Sperry describes as channeling “the salty spirit and inge-nuity of its founder and coincides with the brand’s 80th anniversary.” Sperry says that this reenergizing of the brand for today’s customers will reflect “the authentic nature and values of the brand.” This cus-tomer focus identified a new segment. Called “Intrepids,” the segment is “a younger, passionate individual united by the same adventurous spirit” as Paul Sperry. This is a global and digitally connected group. The campaign idea is to connect “with these modern-day explorers who are fueled by a passion to live a meaningful, fulfilling life, rather than simply living in the moment.” Rick Blackshaw, the Sperry presi-dent, said, “It is our mission to ignite the human spirit through the power of sea-based discovery and adventure. We aim to build rel-evancy with a bold, intrepid consumer around the globe.” 13

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Endnotes 1. See Light, Larry and Joan Kiddon, New Brand Leadership , Pearson

Education, NJ, 2015.

2. Suddath, Claire, with Duane Stanford, “Coke Is Ready to TalkAbout Its Problem: Inside the Relaunch of America’s No. 1 SoftDrink,” Bloomberg Businessweek , August 4–10, 2014.

3. FD (Fair Disclosure) Wire , MillerCoors Trading UpdatePresentation, Final, November 6, 2014.

4. Nassauer, Sarah, “If Your Fridge Could Talk.... Campbell Classifies Six Types of Cooks as Companies Tailor Holiday Food Marketing,” The Wall Street Journal , December 17, 2014.

5. Ng, Serena, and Ellen Byron, “P&G Exits Slumping BeautyBusiness,” The Wall Street Journal , July 7, 2015.

6. De Botton, Alain, “I Travel Therefore I Am,” Financial Times , August 15–16, 2015.

7. Neckopulos, Jim, “Segmenting Small-Business Customers: WhileMost Banks Segment Small Businesses According to RevenueSize or Number of Employees, It’s Far More Effective to Do SoAccording to the Lifecycle Needs of the Business and the Owner,” ABA Bank Marketing , November 1, 2010.

8. Lazare, Lewis, “Not Lovin’ This Lazy McDonald’s Effort,” ChicagoSun Times , January 24, 2006.

9. Business Wire India , “Saint-Gobain’s Process Systems Business UnitAnnounces Revamped Brand Portfolio,” February 9, 2015.

10. British Airways , “Step into a New World,” 1993.

11. O’Boyle, Ed, and Amy Adkins, “Companies Only Deliver on TheirBrand Promises Half the Time,” Gallup Business Journal , May 4,2015.

12. Ibid., O’Boyle and Adkins.

13. Business Wire , “Sperry Announces Brand Repositioning and GlobalCampaign Launch; Brand Targets New Consumer Mindset andInspires Others to Live Life to the Fullest,” February 24, 2015.

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107

16 Rule 3: Reinvent the

Brand Experience

As the British Airways example and other examples show, brands are promises of relevant and differentiated experiences. The total brand experience (functional, emotional, and social) is what defines the relevant distinctiveness of the brand.

The practices for reinventing the brand experience are these:

• Innovation and renovation

• Marketing

• Trustworthy Brand Value Equation

• Fair value

• Total brand experience

Innovation and Renovation

As we explained in Chapter 6 , “Tendency 6: The Failure to Inno-vate,” the failure to innovate (or renovate) is a marker for trouble. Brands stay relevant and current through “news”—that is, tell me about the interesting things you are doing and offering. News is key because it generates frequency. News—any way you receive it—gets a customer in the door or onto the website or tapping the app. And today, news travels fast. Tell customers what is new and what is dif-ferent. For people to change their behavior, a brand must change. Innovation is change. For people to change their behavior, the brand must help them learn something new. Learning something new, something surprising, something delightful, and something unique

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will generate behavior change. Continuous renovation and innovation are the imperatives for success. Product and service renovation and innovation are both essential to enduring profitable growth.

To revitalize a brand, change people’s behaviors, and then change their attitudes. Why? Behaviors can be based on rote or cost or con-venience. But just because someone frequents your brand does not mean that that person favors your brand. To gain favoritism, it is nec-essary to change people’s attitudes about that brand. And the best way to do this is to provide them with news: new information that provides permission to change their minds. An attitude is an accumu-lation of information about something resulting in a predisposition to act in a positive or negative way. To change people’s predispositions, change the base of the information that generates their predisposi-tions. Northwest Airlines in the United States thought it had a lot of loyal customers because they were such frequent users in and out of its Midwest hubs, such as Detroit and Minneapolis. In fact, however, the airline, known as “Northworst,” had a lot of customers who had no choice because the airline owned the Midwest corridors.

To create buzz and future purchase, Google had to create a “user” base for its Google Glass. Google had to change behaviors. It used a team of “early adopters” to wear the product, show what it could do, and extol its benefits. The early adopters were thought of as slightly smug and sometimes ridiculous looking. Instead of changing people’s behaviors with the news about Google Glass, those in the forefront of user-ship went from cool to uncool in nano-seconds. Google with-drew the product and is now (it is rumored) repurposing Google Glass and fixing its design flaws.

In 2002, the McDonald’s team recognized that there were still a lot of frequent customers, but these customers no longer favored the brand. It was a cheap and convenient alternative. There was no one thing that helped to create favored frequency rather than mere frequency. News played a huge role in helping to increase visits and subsequently change minds. Food news led the way with salads, apple slices, and milk in Happy Meals. McCafé offered a Promise of superior coffee at better value. Modern design turned old, childlike restaurants into places that delivered a Forever Young experience. And these are just some of the changes that brought innovations and

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CHAPTER 16 • RULE 3: REINVENT THE BRAND EXPERIENCE 109

renovations to McDonald’s. There was a strategic design to every effort, an experience crafted to delight the youthful spirit in all of us.

Apple keeps customers interested and brand bonded with innova-tions and renovations. Amazon adds news across its broad spectrum of offerings and has innovativeness as a critical part of all its func-tions. Popeye’s uses spices to “renovate” product offerings to make the menu more exciting and relevantly different from its competitors.

At Crowne Plaza Hotels, Janis Cannon led the brand team to develop innovations supporting the company’s Brand Promise for ambitious business travelers. These innovations involved room design and service design. Business travelers have specific needs and prob-lems while they are on the road. After reviewing and synthesizing its knowledge base, Janis Cannon and her team created a blueprint for a room design more conducive to in-room work productivity and post-work relaxation. Most hotel rooms are the same for everyone, with differences based on size of room and amenities such as extra plugs or a fax machine. Ms. Cannon wanted to create a room design from scratch in which business travelers felt so comfortable that they could actually be more productive while working. It meant restructuring the room traffic pattern, the furniture, the zones, and the noise abate-ment. All of these changes had to be designed as affordable-to-build: hotel owners may have hotels with 300 rooms. If, for example, a room redesign costs U.S. $10,000, multiply that by half, or 150-business rooms per hotel. That total sunk cost for an owner would be U.S. $1.5 million for each renovated hotel. Crowne Plaza’s business productiv-ity room has been so well received that the architects who initially resisted the new ideas now claim it as their own invention describing it in detail on their website. 1

For some of the food companies in trouble, innovations have been slow or nonexistent. Companies like Campbell Soup Company and Coca-Cola have compensated for their failure to innovate through purchases of brands with more current food and beverage cache, such as Bolthouse and Garden Fresh Gourmet (Campbell), Honest Tea, Zico, Fuze, Odwalla, Fruitwater, Suja (Coca-Cola), Kashi (Kellogg), Annie’s (Kraft, now Kraft Heinz), and Ben & Jerry’s (Unilever) to name a few. However, for some of these “purchased halo” brands, the

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going has been very rough. Kashi is a good example. It has struggled not only culturally, but in terms of customer-perceived trust as Kel-logg’s changed enough ingredients to have Kashi cited for false claims regarding the “natural” quality of many items in the product line.

Currently, McDonald’s is exhibiting an innovation mind-set again. The Crispy Buttermilk Chicken Sandwich is a new and improved variety of chicken sandwich. All-Day Breakfast is capturing customer interest. The Create Your Taste (CYT) menu, in which customers cus-tomize their own burger, is a major initiative. The idea is to compete with “fast casual” brands like Chipotle. Based on press reports, fran-chisee surveys, and analyst meetings, the CYT menu creates a wait of 7–10 minutes. Fast food needs to be fast. Chipotle delivers its Food with Integrity fast, even though it customizes for each person. Steve Ells’s position has always been that when it comes to fast food, it is not that it is fast; it is the food. You do not have to trade speed for quality and personalization. Chipotle aims to serve quality food to its guests in less than 90 seconds.

Marketing

We discussed Leadership Marketing in Rule #1. But it is impor-tant to highlight the twists and turns of marketing since we first pub-lished Six Rules . There are three key areas where marketing has an opportunity to become a serious C-suite player in today’s organiza-tions. All of these are interconnected:

• The fractionalization of marketing

• The role of the CMO

• The Collaborative Three-Box Model

Brand marketing has the greatest opportunities in today’s new world. In hindsight, the work we did at McDonald’s seems slightly primitive now. The turnaround hinges on marketing, but it is mar-keting in its true, broadest sense: the marketing that Peter Drucker says is all about satisfying customer needs profitably. The Six Rules provide a change for a huge marketing transformation. And the CMO needs to be the one in the leadership role.

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Since 2005, the explosion of new technologies, new databases, new media, and new cohorts of users has fractioned the profession. Marketing is being sliced and spliced into so many singular roles that it is losing its focus. For example, we attended a client marketing meeting where, in addition to the chief marketing officer, there was a chief insights officer, a chief design officer, a chief innovation officer, a chief pricing officer, a chief online retail officer with a chief brick and mortar retail officer, a chief digital officer, a chief IT officer, a chief information officer, a chief mobile officer, a chief loyalty pro-gram officer, and a chief online merchandising officer along with the companion chief brick and mortar merchandising officer. The CMO was left with brand communications because there was not much else to do when all the functions are divided among an army of chief offi-cers. Not surprisingly, each one of these “officers” was head of a chief-dom with its own priorities, accountabilities, agenda, data, research, silos, reporting structure, and teams. And this list does not even cover the agency partners that are as specific in their areas of expertise.

This fractionalization of functions is fracturing the role of mar-keting, eviscerating its efficacy, and diminishing its value. Various functional “chiefs” who compete with each other for limited corpo-rate resources are strangling marketing. Because of this functional fractionalization, marketing is being reduced to merely managing communications and trying to encourage integration. This corrosive behavior is debasing marketing and erasing its essential value to the corporation. The role of marketing is being marginalized and trivial-ized. No wonder top management often outsources brand strategy to external consultants.

The diversification of customer touch points reflects the new order of ways in which a brand can reach customers and potential customers. It is more than Facebook and Twitter. There is an explod-ing array of ways to communicate. There are new apps and new sites every day. Customers have more opportunities to see, hear, create, report, react, and respond than ever before. The challenge of pro-viding strategic direction and effective integration is increasing. The leadership role of the CMO seems to be decreasing.

The CMO must be in charge of marketing, and marketing must be responsible for the following:

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• Helping define the brand’s quality growth strategy

• Achieving organizational alignment behind a common Brand-Business purpose and direction

• Helping define the Brand-Business priorities

• Developing and implementing a balanced Brand-Business Scorecard

• Developing the price-value strategy

• Providing insights into trends, competitive environment, cus-tomer needs, problems, and behaviors

• Leading customer-driven innovation by defining the focus forthe development of innovative and insight-driven products andservices

Beyond responsibility for brand communications, both internal and external marketing are all about how we profitably manage cus-tomer-driven top-line growth.

In many organizations, the chief marketing officer (CMO) is a smaller job than it should be. Or the job is redefined as a brand officer who is responsible for defining the Brand Promise and keep-ing it fresh. However, we have worked with multi-brand clients in which each brand has its own brand officer. This makes the “global” brand officer a police person, with a marginal role at best. The most productive approach to global marketing is the Collaborative Three-Box Model that allows both regional and global leadership to allocate accountabilities in the most effective and efficient manner on behalf of the brand. 2 The fractionalization of marketing and the demoting of the CMO are results of an institutional desire for shifting of responsi-bility. If there are 10 or more people dividing up the marketing func-tion, it is hard to see where responsibility and accountability reside. Each chief is responsible for various activities, but who is account-able for results? Responsibility and accountability are even more challenging in a world buffeted by the colliding and disparate forces of globalization, localization, and personalization. The Collaborative Three-Box Model is the best way to lead brands in this new mar-keting environment. It shifts the responsibilities of global and local brand teams to reflect reality. It provides the global CMO with a more

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forceful job of leading through inspiration, influence, education, sup-port, and evaluation.

The Concept of the New Value Equation

Value is not just a line on an invoice; it is a marketing impera-tive. Of course, the brand must be affordable for its customers and prospective customers. A good-value brand does not mean the brand is cheap. One of the worst elements of modern marketing is the defi-nition of value as just low price . Somewhere along the way, being a good-value brand became synonymous with being the lowest price brand. Value is not merely about low price. As you will read in the McDonald’s case history online, during the recent 2008 recession, McDonald’s CEO Jim Skinner continued to say McDonald’s was recession resistant because it had value prices, allowing customers to “trade down to its cheaper foods.” Value and low price are not the same. However, once your brand becomes defined as just low cost and cheap, you run the risk of declining perceptions of quality, trust-worthiness, and real perceived brand value.

A value equation is a customer’s mental perception of the worth of the brand. It kicks in each time a customer makes a purchase. For example, a bag of Tide Pods with 35 pods retails at a South Flor-ida Publix for $10.99. A box of 50 pods from a South Florida Whole Foods 360 store brand costs $9.99. Is one a better value? Does one of these brands deliver a better washing experience? People consider the brand’s worth with a value equation considering what the costs are relative to the experience received. The cost is the denominator of the perceived value equation, whereas the total brand experience is the numerator of the equation.

To create enduring, profitable, Trustworthy Brand Value, a brand must do more than compete just on price and convenience. McDon-ald’s founder, Ray Kroc, knew the importance of the numerator as well as the denominator. He recognized that affordability and conve-nience were important. He also understood that McDonald’s brand advantage was more than just convenience and price. It was more than

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just a hamburger, fries, a soft drink, or a milkshake. He believed that the McDonald’s brand advantage was also the respectful, friendly, fun experience that the customers receive for their time and money. Ray Kroc reminded everyone that McDonald’s is a “happy place” where anyone can afford to enjoy a happy eating experience appropriate for the whole family.

Changing Perception of Value

In our book New Brand Leadership , we discussed how customer-perceived value evolved over the past 50 years. The changing world of social, economic, technological, and personal forces are affecting customers’ branded experiences because expectations have changed. Altered expectations change the customer’s approach to assessing the value of a brand.

As mentioned earlier, marketers have been their own worst ene-mies by letting “low price” become a substitute for the idea of “value.” Value can happen at any price point: “That’s a great value” can apply to a Porsche and a Prius; it can apply to a shoe from Designer Shoe Warehouse and from Saks Fifth Avenue. It applies to Aldi supermar-kets and to Harrods food court. Value is in the eye of the customer, and it is learned from interaction. Value is relative; the head of Sam’s Club (Wal-Mart’s club store) no longer wants to be perceived as a “value” store as Wal-Mart is but wants to compete for higher income customers as Costco does. 3 Whole Foods says it needs a store designed for Millennials who do not want to (or cannot) spend the money to shop at Whole Foods. At the same time, Whole Foods continues to fight the perception that it is an overpriced grocery store.

Trustworthy Brand Value

Today, there is a new customer-perceived brand value equation: Trustworthy Brand Value. Trust is an important factor in this equa-tion. (We will continue the trust discussion in Chapter 18 , “Rule 5: Rebuild Brand Trust.”)

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A customer-perceived value equation is what you get (functional, emotional, and social benefits) for what you pay (the costs to the cus-tomer in terms of money, time, and effort); this creates brand value. Trust acts as a multiplier when consumers take mental assessments of a brand’s worth. Without trust, brands have little value. This is the new value equation: what you get (expected experience) for costs you pay multiplied by trust. Understanding the drivers of Trustworthy Brand Value is one of the greatest opportunities for brands. Building Trustworthy Brand Value needs to be embedded within the organiza-tion and its brands. It needs to be part of the daily brand discussion. This is a conversation that puts the CMO and marketing at the C-suite table because trust is an essential factor in every relationship, exter-nal and internal. Are we increasing or decreasing our brand’s Trust-worthy Brand Value? Do we measure it? What must we do, continue to do, or stop doing to increase Trustworthy Brand Value? One of the goals we have for our new approach to marketing is to ensure that it creates, nurtures, builds, and grows Trustworthy Brand Value.

Fair Value

To generate Trustworthy Brand Value, the brand’s inherent value must be perceived as a fair value. Fairness is more than mere price; fairness contains justice. Justice means that the benefits-per-costs equation is equitable, just, dependable, trustworthy, and fair. Build-ing brand value is an ongoing challenge. Standing still is brand value extraction. Living off the inherited momentum of a brand’s past suc-cess hurts a brand. To increase shareholder value, a brand must be the most efficient and productive provider of a branded offer that cus-tomers value. Customers need to perceive the brand as great value, not merely appreciate the brand’s price point.

To build Trustworthy Brand Value, it is the role of the brand lead-ership to manage the relationship between what customers are willing to pay and what benefits they receive. Does the customer perceive that the balance is fair? What is the fair value for our offer? Marketers do not determine fair value. Customers do.

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We can create a customer-perception fair value map. By plotting the brands A, B, C, we can see how each brand reflects customer perceived value. Brands A, B, and C are perceived to be fair value for the benefits offered. The diagonal is the “fair-value corridor.” Brands located above this corridor are perceived to be inferior value. And brands located below the corridor are perceived to be superior value.

Deal Loyalty and Real Loyalty

To be considered fair value and not be perceived as cheap, brands must avoid excessive marketing communications that emphasize price as the reason to buy. Building deal loyalty does not build brand loy-alty. Deal loyalty is not real loyalty. Brand loyalty cannot be bought with bribes. When you lure customers with incentives, all you do is make the customer loyal to the deal instead of loyal to the brand. If there is a better deal elsewhere, deal-loyal customers are out your door and in through the competitor’s door. If a customer does not prefer your brand’s experience, then making it cheaper and easier will not build brand strength.

Occasionally reminding people that a brand is affordable is important. But excessive emphasis on price alone destroys real loyalty and builds deal loyalty. Instead of the dominant message being about price, to revitalize a brand, the new communications emphasis needs to be on brand-relevant differentiation. Tell customers that this is a great brand at a great price rather than just communicating that this is a great deal.

Total Brand Experience

The Brand Purpose and Brand Promise define the total brand experience we wish to deliver to every customer every time in every country in which the brand will compete. But how will the brand leader ship bring this brand experience to life? Rule #6 ( Chapter 19 , “Rule 6: Realize Global Alignment”) focuses on alignment. The Plan to Win is the major aligning document. It defines the brand’s

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(global) priorities and the action implications across the Five Action Ps: people, product/service, place, price, and promotion. The total brand experience includes both the costs to the customer and the benefits derived. The trust multiplier is also an inherent part of the total brand experience. If the customer perceives that the expected experience will once again be a crapshoot, the perception of the total brand experience will suffer.

The delivery of the Five Action Ps must be consistent, reliable, and credible; in other words, it must be trustworthy. So for the sake of discussion, imagine you have had a bad experience in a small airport. You contact the airline’s online customer complaint site. Someone answers you. You write back. She answers you again. She promises the situation will be handled and that the next time you travel through that airport on that airline, you will not experience that problem. But guess what? A week later, you make the same trip and experience the same problem. It no longer makes any difference that you traveled using coupons or miles or that you were upgraded to a better seat. Your total brand experience is eclipsed by the fact that you cannot trust what the airline says.

The Five Action Ps of the Plan to Win

The Five Action Ps of the Plan to Win help define what the brand will do for its customers—in other words, the total brand experience the brand wants to deliver. The Five Action Ps are the brand’s essen-tial, common must-do-now list.

People

Just because a business is customer focused does not mean that customers come first. Customers come second. Customer-focused employees come first. That is why People is the first Action P. Inter-nal alignment comes first. A committed culture is critical. Regardless of your industry, employees are the frontline when it comes to cus-tomer relationships, especially in a service business. Internal brand pride is a critical success factor affecting external brand outcomes.

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HR has a huge role to play in brand revitalization. You cannot rein-vent the brand experience if your people are not proud and inspired to be a part of the new brand direction. Leadership must lead.

If you want your employees to love your brand, you have to love your employees. If you want your employees to have passion and pride in delivering a superior brand experience, you have to show them that you have passion and pride in what they do and who they are.

CEO Douglas Conant took this approach in his Campbell Soup Company turnaround. As he said in an article in 2011, “I firmly believe that you can’t win in the marketplace until you start winning in the workplace, and so when I got here, we created what we call our ‘Campbell Success Model.’ It says we’re going to focus on winning in the workplace, which will enable us to win in the marketplace, which will enable us to win in the community and make a better world. And, we must do all of that with integrity—that last point is non-negotia-ble.” Mr. Conant went on to describe the “Campbell Promise,” which articulates that the company must value its people and its people must value Campbell. He improved the company’s engagement scores year after year. He created a Campbell Leadership Model and used it as a foundational way to encourage internal leadership development. He made a lot of significant changes aimed at creating a proud, enthused army of Campbell acolytes. His belief was that this would change the way Campbell went to market and change its success rate. 4

In the 1990s, people were not proud to work at Continental Air-lines, and the brand suffered. As we mentioned earlier in our dis-cussion of the Twelve Tendencies in Part I, Gordon Bethune’s first task was employee engagement and enthusiasm when he arrived at Continental in 1994.

With a franchisee business, the People P is even broader. Not only must employees be behind the brand 100%, franchisees must believe in the brand as well. In 2002, the Oakbrook, Illinois, McDon-ald’s headquarters was a depressing place. Morale among corporate employees was deathly. Crewmembers were embarrassed to be work-ing in the stores. Unhappy employees at the counter took their feel-ings out on customers. Reports of rudeness and inaccurate orders rose, bathrooms were not cleaned as frequently, tables were dirty, lines were long, drive-through wait times increased. And, at the same

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time, the franchisee community was isolated, angry, and vocally antagonistic. Internal marketing was the first priority we engaged in at that time. CEO Jim Cantalupo assumed a leadership role. He pub-licly defended the reputation on behalf of every individual who works at McDonald’s. Even though costs were being cut, the investment in and the quality of the HR role increased. (See the online McDonald’s case study at www.ftpress.com/sixrules .)

The People P comes first. Nothing in the store will work if the people and the owners are not on your side. As we said then and still say today, “Nothing happens until it happens in the restaurant.”

Internal troubles are a sign of decline. McDonald’s has reverted to a challenging employee situation. Corporate morale is in decline. Restaurant employee pride has declined. Quality and service are suf-fering, as are cleanliness and accuracy. McDonald’s is not a “happy place.” The reports on franchisee “happiness” are dismal. The latest survey from July 2015 indicates that the franchisee morale is declin-ing and that they perceive their relationship with McDonald’s corpo-rate at a low point. 5

CEO Cheryl Bachelder saw how the unfortunate state of fran-chisee relations at Popeye’s was hurting the brand. She focused on a remedy almost immediately. Ignoring the franchisees, as McDonald’s was doing in 2002, was not an option. Here is what Ms. Bachelder said in 2014: “During the first meeting I had with franchisees, they wanted a palace coup—they wanted everyone replaced, and they didn’t trust anyone. You only trust (the) people you know, and that was the prob-lem. So...we started listening to them. In our quarterly meetings, the company told them stuff and didn’t listen. When we wanted to reimage the stores, they said no.” Ms. Bachelder went on to say that her team listened to the franchisee issues, incorporated their ideas in the designs, and then built 10 stores so the franchisees could actually touch and see. All the costs were clear. Additionally, the company began to involve franchisees in important decisions. 6

If your people do not believe in the brand, you cannot expect your customers to believe in the brand. This has implications beyond just organizations that do business in a service sector. People do not just follow what the leaders say they will do; they follow what the leaders do. Leadership is top down. This is why internal marketing is


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so important. External plans and programs will not be as successful if you put the outside world before your own people. Employees come first.

The first “i’m lovin’ it” advertising launch was internal: to all employees and crewmembers globally. Everyone felt they were a part of something special and bigger than they were. They understood that they were “in on” something that lots of others wanted to know about. In today’s world, this type of internal communication is easier to do and more difficult to manage but still necessary. Technology can help spread internal news faster and more beautifully than ever. At the same time, secrecy is virtually impossible. The fact is that your people come first, so figure out a way to keep them connected and aware of what you are doing: keep them as “in the know” insiders and galvanize them for alignment.

Product (Service)

Customers are the lifeblood of any business, and they are not stupid. They recognize when brands lose their way. Remember the Trustworthy Brand Value equation: if customers are going to spend hard-earned money, time, and effort for a branded experience, the brand should be relevant and differentiated, promising and delivering superior and trustworthy customer-perceived value.

Products and services are the tangible evidence of the truth of the promise.

Products and services need to be kept up to date. In many cases this requires renovations or reimaging. We discussed the problem of losing focus on the core products (services) already. It is worth reiterating that it is a death wish for a brand to milk core customers and incrementally degrade core products for cost purposes. A policy of getting bigger by being better demands ongoing renovation and innovation. Lego is researching how to improve the sustainability of its little plastic blocks. Right now, the plastic use at Lego is enor-mous. Knowing the concerns of its parent customers, and anticipating the needs and concerns of generations to come, Lego is investing in ways to create blocks that use less plastic and more eco-conscious substances. 7 Mattel has not had the same success as Lego. The iconic

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mainstay doll has not been kept up to date in relevant ways. As of this writing, word is that Barbie is now going to have “artificial intel-ligence” inside so she can be your child’s best friend. 8

The recent success of Wendy’s is in part attributable to fixing and renovating the core products. Popeye’s uses spices to renovate core products and make them appear to be current and cool. KFC is focusing on its core fried chicken product and its bucket offering. Penney’s is revitalizing its original core brand reputation and private label brands. Microsoft is reestablishing some of the iconic elements of past Office products in Microsoft 10. Even if your focus is on newer concepts, products, and services, brands must avoid the incremental degradation of the core products and services because of cost cutting.

Service brands suffer from incremental degradation as well. Fli-ers are quite aware of the elimination of services. This is more than eliminating the olives from salads in business class. After charging individuals close to U.S. $500 for membership in the Delta airline club, Delta now charges an additional U.S. $20 for each person the member brings in to the club. Delta ignores the negatives that accrue to the brand by this rude behavior. Or, to help solve an “oversold” situation, gate agents promise customers willing to give up their seats vouchers that they say can be used over the holidays. This will not happen because, as many savvy customers know, the “blackout dates” will prohibit you from using these vouchers until the holidays are over.

Market segmentation is an essential guide for product innova-tion and renovation. Products and services need to address customer problems, satisfy customer needs, or anticipate customer needs. Mar-ket segmentation provides specific directions (not the answers) for developing relevant, differentiated creative solutions. Knowing the “who x why x context (how, when, where)” must be the beginning of any innovative process.

It is not unusual to approach R&D by looking for ways to take what a brand knows how to do and then trying to convince custom-ers that they need what the brand knows how to produce. This is not customer driven.

In the fall of 2011, Ron Johnson was appointed as CEO of JCPenney. His mission was to breathe new life into the brand. Seven-teen months later, he was out of a job. What happened? This is a great

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example of innovating without understanding market segmentation. The changes were made without an appreciation of the needs, con-cerns, and occasions that drove the JCPenney customer. The changes were unproven. Decisions were made regarding people’s connections to specials that ran counter to their attitudes of their market segment. In many ways, it is also an example of Tendency #1, the height of arro-gance, which is discussed in Chapter 1 , “Tendency 1: The Arrogance of (Great) Success.” After all, Apple is a huge success. Mr. Johnson believed the lessons he learned while at Apple could be translated directly from Apple to JCPenney. A deeper understanding of the JCPenney customer base might have led Mr. Johnson to approach his vision in a different manner.

New product development must be customer driven. This means looking at the segmentation before investing resources. Then all the creative input, synthesis, ideation, and visionary anticipation can take place. The Crowne Plaza business productivity room had a tight, clear, articulated definition of the market segment along with a set of parameters around who the target customer is, what the target cus-tomer needs when traveling on business, what the target customer’s problems are, and in which kinds of business occasions these prob-lems happen. In addition, a Brand Promise was defined that was relevant and differentiating to the target market. Although often chal-lenging, with the clear Brand Framework in hand, the creativity of the architectural firm was contained from straying into an unrelated zone and was forced to focus on a Crowne Plaza outcome and not a purely creative one.

When it comes to new products, stay focused. Do a few things well. Be consistent with the strategic Purpose and Promise. Keep it simple. McDonald’s said it was committed to reducing operational complexity. At the same time, in October 2015, McDonald’s rolled out Create Your Taste, a new chicken sandwich, and all-day breakfast, and it reintroduced for a limited time McRib in 8,000 restaurants. These initiatives implemented all at the same time create operational complexity.

A brand innovation or renovation need not be a product or ser-vice. It may be a process, internal or external. At Campbell Soup, one of the changes Mr. Conant made was a new system for reorganizing

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the soups on the grocery shelves. Customers found the current (2002) arrangements confusing and could not find what they were looking for. 9 The Campbell’s IQ Shelf Maximizer was an innovative new sys-tem. 10 The new employee engagement program Mr. Conant insti-tuted was also an innovation, but this time, it was an internal one.

Place

Place is the face of your brand. In 2009, place was more than a store or a retail business or a trade event even though the power of such services as Amazon, eBay, and drugstore.com and online busi-ness-to-business purchasing systems was in play. Today, place is much more multidimensional. Depending on the business, place can be the website, the restaurant, the office, the waiting room, the hotel room, the customer’s office, the tablet, the mobile phone, the showroom, the shelf space, buses, vans, and trucks. It can be a drop-down menu, an app on a mobile phone, or a watch. Place can be a virtual chat room, an online community, or an airline club. For one of our clients, place was actually your place, your home. That is where the sale was made.

No matter where or what place is for your brand, it must attract and not detract from the brand. The brand interface must be kept in good repair and kept up to date with the forces that shape the world. “Nothing happens until it happens at retail” wherever and whatever that occurs for your brand. Retail is the moment of truth. It is the most powerful, most intimate, most credible brand message.

Bonobos Clothing is an online site for men’s wear. Recently, the brand opened retail outlets, but not for actual buying and taking home. The site allows the customer to select by touch and feel the clothing he wants to purchase and to size properly. But the customer still needs to order online. Now the online retail experience is sup-ported by the personal confidence of the right choice for me.

Hotel Indigo is based on place, but in a unique way: its place is the neighborhood in which the hotel is located. Each hotel reflects the unique character of the surrounding area. It is a way to connect to guests who want a special type of “local” stay. Although Hotel Indigo at the Albany, New York, airport has an airport, airplane hangars, and a pet travel hotel as its “neighborhood,” the hotel integrates upstate

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New York as its neighborhood. For example, it has an excellent res-taurant that serves food grown, raised, fished, and created by local New York State farmers.

American Express Centurion Cards have opened extremely luxu-rious airline lounges for cardholders. The promised brand experience of this level of membership is brought to life, reinforcing the prestige of the brand and the confidence that you made the right choice in credit cards. A card is now a place.

TD is an “electronic” lender (bank) from Canada, but it is a big believer in the brick and mortar bank, just not the kind that Boomers and their parents grew up with. The concept is to “provide the cus-tomer with an omni-channel experience where the physical presence is central.” Customers can start the lending process at home on an iPad, pick up the form again on their iPhone on the train to work, and then close the deal in an actual branch office. TD is opening teller-less branches as well. The branches have coin counters for changing coins into bills or into your account, juke-box-like quiz machines for the kids, and TD dog biscuits if you brought your four-footed friend with you. 11

Avon has struggled with a business model that for decades sold to women in their homes. This worked when the only places for cos-metic purchases were department stores. New beauty-only stores and online sites changed all that. Technology that captures colors and snappy yet chic beauty sites transformed buying online cosmetics. Sephora and Bliss have retail options as well as online sites. Drug-store.com has Beauty.com, and Amazon.com sells cosmetics as well. (As of this writing, it is reported that under pressure, Avon is consid-ering negotiating for the sale of its North American business.)

The idea of brand as place is not new. What are new are the options for place. In the late 1970s and early 1980s, Miller Beer looked at its corporate sibling, Marlboro, and saw its success with Marlboro Coun-try. The “persona” of Marlboro Country helped define the personality and experience of the Marlboro brand. The beer teams came up with an idea: let’s talk about the occasion for a Miller beer. The agency cre-ated Miller Time—that special time after work when you gather with friends at the local saloon to wind down from a hectic, pressure-filled

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day. Miller Beer took a time of day and turned it into a place to be where only Miller Beer would do.

Understanding the competitive set will help with reimaging place. Again, segmentation has a role to play. Once the brand identifies the “who x why x context,” the customer will define the competitors within those guidelines. McDonald’s focus on “fast casual” restaurants such as Chipotle as the competition to beat seems to be at the core of why the Create Your Taste menu now exists. Will McDonald’s core cus-tomers pay more and wait about 10 minutes to receive their order? The brand may lose out to traditional fast food burger competition such as Burger King and Wendy’s as well as to newcomers of afford-able prepared food, like the local supermarket (for example, Kroger’s) and food trucks where good food is delivered quickly. 12 And there are a lot of new “better burger” brands for McDonald’s to worry about.

Place is now such a fluid P that things taken for granted several years ago are now upside down. Why bother with the doctor’s office when the examining room is now your home? Today, not only are you able to have a doctor diagnose and prescribe over Skype, but also there are now services that send emergency or nonemergency medi-cal personnel to your home; all you do is go online. Pet stores such as PetSmart have medical clinics inside so pet owners can skip having to go to a vet at a different venue. They also have grooming facilities: one-stop shopping for Fluffy and Fido. In a world of smart watches that clue you in to your real-time fitness, when you can have your entire physical condition displayed on your wrist, why do you need a sports fitness expert? The watch face becomes the place.

Toyota is moving toward online shopping for all its brands, not just its Millennial-driven Scion. Originally, the Scion brand devel-oped an online shopping experience because Toyota believed Scion’s younger buyers might prefer this to spending a lot of time in a showroom. However, Toyota is now rolling out a similar program for the Toyota brand because Millennials buy Toyotas, not just Scions, and Millennials have a subgroup that is in their 30s—more mature and some with families. The online site is now the storefront. With such an online experience available, buyers can avoid long waiting periods at the dealership. At some Toyota dealerships in the United

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States, buying a new car can take five hours. If that time can be halved because of online shopping and deciding, the purchase experience can be remade. 13

The 2002–2005 McDonald’s turnaround had a Place focus and involved refreshing the restaurant design. The company began by reimaging the McDonald’s next door to the America’s headquarters. This served as the role model for bringing the restaurant vision to life. In 2015, it may seem to be a more complex issue. However, begin-ning with segmentation and fully understanding the true customer-defined competitive set is always enlightening. Making McDonald’s place more like Chipotle is not the answer and shows a misunder-standing of what makes Chipotle appealing. As we stated in Part I, “The Twelve Tendencies for Trouble,” Chipotle is based on more than customization: it is based on doing everything with integrity. The food just happens to be customized quickly. Chipotle’s food is grown, raised, harvested, and crafted with integrity. The brand cares about how it treats its employees. It cares for the environment, the animals, and the community. People, especially Millennials, want that connec-tion with something bigger than themselves. In fact, Chipotle’s recent actions relative to an E. Coli scare reinforce their “Food with Integ-rity” Promise. Only 11 restaurants had problems with the bacteria, but Chipotle closed all 43 in the Pacific Northwest as a precautionary measure to keep all Chipotle customers safe. As Steve Ells stated in the message from Chipotle that ran in The New York Times , “Out of abundance of caution, we immediately closed the 43 Chipotle restau-rants in those markets.” 14 (It is unclear at this writing what the brand ramifications will be after additional outbreaks of E. Coli in states across the U.S.)

After Radio Shack filed for bankruptcy in 2015, the new owners asked the judge to approve a new version of Radio Shack. The brand was once the place for home electronics DIYers. It lost out, several times, by not finding a positioning that was relevant to its evolving customer behaviors, needs, problems, and attitudes. The new own-ers are considering Radio Shacks with different stores inside, similar to a department store. 15 The department store as a brick and mortar option is declining. It waits to be seen whether this kind of Radio Shack place is meaningful.

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Price

Price is one of the costs in the Trustworthy Brand Value equa-tion. However, it is a significant one. Price not only tells a customer how much money will be spent, but is a marker of perceived quality. Sociologists and social psychologists as well as economists tell us that customer perceptions of the perceived quality of a product or service are influenced by its price. Pricing needs policy. In the same way that trademarks must have an intellectual property policy, pricing must be strategic with a clear and consistent policy.

Many brands have price or affordability as part of their Prom-ise. In today’s world, H&M and Zara are known for fast, chic, young-spirited fashion at affordable prices. IKEA provides furniture, bath-room fixtures, kitchen layouts, lamps, and other home accessories at affordable prices; you just need to assemble them yourself.

Target rose to glory by beautifully balancing affordable prices with designer items. In fact, it got into trouble when it focused on price alone and had plain, uninspired designs to match. Interestingly, the “low price + low interest” items equation has actually positioned Target as a poor value on the YouGov BrandIndex. 16

Sam Walton built a retail empire making shopping for every-day needs affordable and available in small town America. Today, Wal-Mart is thriving with a focus on individuals who make less than U.S. $45,000 a year. His eponymous Sam’s Club is itching to deliver higher priced, higher quality items to more upscale customers. The CEO of Sam’s Club said to the press, “We want to be less of a Wal-Mart.” 17

Ray Kroc democratized eating out. His vision was a restaurant that made eating out so affordable that more people could eat out more often. Superior availability and affordability were key contrib-utors to the success of McDonald’s. The original McDonald’s sign announced “15¢ Hamburger.” As Ray Kroc said in an internal review at the end of 1975, “I’ve always said that we may not always be able to sell hamburgers for 15¢. But whatever we sell them for will be in direct proportion to what 15¢ was twenty years ago. And, this we have maintained.” 18

The leadership teams under both Jim Cantalupo and Charlie Bell kept Ray Kroc’s Promise. One of the most significant results of

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refreshing Kroc’s affordability message was a three-tier pricing strat-egy. There were the items on the Dollar Menu and other affordable LTOs (limited time offers) and value meals. There were the core products that were also affordable and would not be discounted. And there were the premium price items that were limited in number. After 2005, something happened. The number of higher priced items rose. Brand profitability rose via the higher priced items, not because of increased customer frequency. Customer counts were actually down.

Hotels are starting to use the same unfortunate pricing tactic as the airlines are using—tactics that most customers become wise to almost at once. For example, airlines charge for the checked baggage. But when you go to the gate, you learn that “Today’s flight is com-pletely full. So we are looking for passengers who would be willing to check their bag at no cost to them. This will be complimentary.” And, then, the savvy flier is right up to the desk checking the bag for free. Hotels are charging resort fees and towel fees for gym usage, service beaches, and pool locales. Wise guests are onto this, as they are knowledgeable about the $5 breakfast fee when the breakfast is supposed to be free. Rental car companies also use price tactics to raise income when they declare they are offering lower prices. In fact, some of the rental car companies have raised government and state hackles because they charge a $40 fee for an EZ Pass or a Sun Pass or whatever the state’s electronic toll pass system is. Rental car custom-ers found they were charged for the toll and for the fee of using the equipment even though such equipment is already installed in the car or on the license plate frame.

Recently, Starbucks raised prices. The reason this has drawn attention from the press is that the price of coffee beans has fallen due to commodity changes. As the author of a New York Times piece on Starbucks said, “I follow the financial markets closely. Why should I be paying more at Starbucks when coffee has been getting cheaper?” A Starbucks spokesperson said that it is Starbucks’s aim to “balance the need to run our business profitably while continuing to provide value to our loyal customers and to attract new customers.” The cus-tomer reaction has not yet happened. But, as the author concludes, “Starbucks assumes that customers will consider the new prices to

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be reasonable, and maybe they are, if you considered past prices reasonable.” 19

Promotion

Everything communicates. Promotion is more than tactical adver-tising programs. Brand promotion is about creating an integrated approach to advocating on behalf of the brand. Advertising is now fractionalized with banner ads, native ads, mobile ads, website ads, as well as network TV, cable TV, satellite TV, online TV, multimedia radio, and outdoor advertising. Digital outdoor ads are advanced well beyond a man blowing smoke rings in New York’s Times Square. A digital outdoor ad can point you to a store where there is a sale for you or download a coupon for the food court in the mall across the street from your current location.

Promotion is another one of those terms that has taken on a lim-ited and unfortunate meaning in marketing. As with the “value equals low price” connection, marketers are their own worst enemy when it comes to promotion. Marketers often interpret promotion as meaning short-term tactics designed to generate immediate traffic. Promotion has come to mean a price-off event, and that is a mistake. Promotion is more than “20% off this weekend;” it is more than “two for the price of one.” Promotion must be more than a short-term tactical incentive to “buy now.” However true this may be, it seems to be a losing battle: marketers persist in making promotion a Limited Time Offer (LTO) rather than a long-term view of how to promote the brand to a higher level in the customer’s mind.

The original definition of promotion is not as incomplete as it is in current marketing. To “promote” means to elevate to a higher level, to advance in rank or position. The purpose of all brand com-munications should be to elevate a brand to a higher level, to advance the brand to a higher position in the customer’s mind. According to Merriam-Webster, promotion means “the act of furthering the growth or development of something.” When marketers discuss the balance of advertising versus promotion, they are posing a false choice. All marketing communications is promotion and should promote the brand in a manner that furthers the growth of the brand.

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The promotion P in the Plan to Win does not mean a monthly promotional calendar of separate, short-term, disconnected activities. Nor does it mean a fractionated, media-specific incentive to immedi-ately buy. The promotion P includes every communication about the brand, whether it is a game, a tie-in, an advertisement, a mobile alert, an online coupon, or a corporate brochure. All brand communica-tions activities need to be executed around a coherent message with a consistent voice promoting the brand to a higher level, furthering the profitable growth of the brand.

The opposite of promote is demote . Unfortunately, a lot of promo-tions today are not brand promotions. They are brand demotions in disguise—activities that drive the brand’s sales at the expense of the brand reputation, all to the detriment of the long-term health of the brand. Excessive reliance on inconsistent, short-term brand messages demotes a brand. Brand demotion does not promote the brand to a higher level; instead, it cheapens, confuses, and detracts from brand building. We cannot demote our brand today and expect a strong brand tomorrow. Disconnected promotional communications lead to incremental brand degradation. Instead of communicating “great price,” we need to communicate “great brand at a great price.” Dur-ing the recession, the continuous description (by McDonald’s and by the press) of McDonald’s fare as cheaper food for people trading down was brand demotion on an enormous scale.

The automotive industry is masterful at brand demotion, rely-ing on regular massive incentives to sell cars. Customers know that these incentives are built into the so-called “regular” price. When we worked with Nissan, Carlos Ghosn was vocal publicly that the per-ceived value difference between a Nissan and a Toyota was more than $1,000 higher for Toyota. Nissan dealers had to reduce the price of a Nissan by $1,000 to have a customer view Nissan as equal in value to Toyota. We have already commented on the airline business that reduces the cost of a seat so much that it appears to be a true bargain. However, to be profitable, the carrier then charges extra for every other item and service. And the hotel industry seems to be following suit.

An integral and immediate part of any brand turnaround is to ensure that marketing communications programs promote the brand to higher levels of customer appreciation. Whatever media outlet,

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creative approach, device, or technology used, the campaign strategy must be to shun excessive emphasis on the deal of the month and favor a consistent, coherent, integrated brand-building message. This does not mean that a brand cannot communicate affordable pricing; it means that the idea should be, “Here is a great brand at this great price,” not “here is a great price for this brand.”

Brand Journalism 20

In June 2004, at the height of the McDonald’s turnaround, we explained the new concept of Brand Journalism at a conference spon-sored by Advertising Age . Brand Journalism was the new marketing approach at McDonald’s that became part of the turnaround plan. Brand Journalism is even more relevant today than it was 10 years ago.

What Is Brand Journalism?

Brand Journalism is a multidimensional, multifaceted way of cre-ating a brand story. It means telling the many facets of the brand story; you know the brand and what the brand means. Underlying Brand Journalism is the idea that a brand is not merely a simple word; it is a complex, multidimensional idea that includes differentiating features, functional and emotional benefits, as well as a distinctive brand character. In this digital, app-laden, mobile marketing world, no single communication can possibly relate a standardized brand message to every customer that is relevant at the right time for the right reasons.

With Brand Journalism, marketers can address the fact that a brand means different things in different regions to different people in different situations. In the United States, the Holiday Inn brand is viewed as an affordable brand for family travelers, whereas the Chinese perceive Holiday Inn as an upscale experience. And in the United States, Holiday Inn satisfies different needs for a person trav-eling with family on vacation compared to when that same person is on a business trip. In Europe, Pizza Hut is a sit-down Italian experi-ence, in the United States it is primarily for take-out pizza, but in

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China it is an exuberant atmosphere with a menu including close to 200 varied items.

Big brands, especially mega brands like Coca-Cola, McDonald’s, Kellogg’s, GE, Samsung, Sony, HP, Marriott, IBM, Visa, and BMW, mean different things to consumers at different occasions: at home, away from home, morning, afternoon, evening, breakfast, lunch, din-ner, snack, late night, weekday, weekend, with kids, on a business trip, on a cruise, at a family gathering, or at college. McDonald’s is a great example. It can satisfy the needs for convenience, affordability, and fun for a parent with kids on Saturday at lunch. Or McDonald’s can satisfy a salesperson’s need on a business trip going through the airport prior to boarding a flight. And for a group of young adults, McDonald’s satisfies the need for something to eat late at night. Geography makes a difference, too. McDonald’s is a different experi-ence in the exurbs of San Francisco than it is on the Champs Elyseé in Paris. Yet, it is all McDonald’s.

In December 2009, Advertising Age listed Brand Journalism as one of the top 10 most important ideas of the previous decade. “It’s arguably the most realistic description of marketing today—perhaps ever.” According to the writer, Matthew Creamer, “...more marketers and agencies should be revisiting (Brand Journalism)...in an age of instant customer feedback.” 21

In recent years, with the explosion of media types and outlets for creativity, feedback, and co-creation, Brand Journalism has become a regular approach for communicating with customers and for cus-tomers to respond to your communications. (It even made it to a seminar at SXSW.) Brand Journalism is so hot it has even penetrated the academic world of learned journals, with such musings as Greer, Jennifer D; Cole, James T., “Audience Response to Brand Journalism: The Effect of Frame, Source, and Involvement,” in Journalism and Mass Communication Quarterly , December 2013. Brand Journalism is discussed more than brand content in the health services marketing arena and is part of the marketing of companies in the business-to-business (B2B) world, such as to Cisco and Raytheon. “Verizon has a mobile web site with 75 editors, writers and videographers where the Verizon lifestyle is promoted through specially designed content. Red Bull, the energy drink, has a web site and a print magazine called

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Red Bulletin. It features fabulous photography and extreme sports stories consistent with the edgy, youth orientation of the brand.” 22

The reason we named it Brand Journalism is that the brand’s com-munications should mimic the ideas behind magazines, news papers, and journals. Regardless of brand, magazines, journals, newspapers, blogs, and so on have an overarching brand idea that defines its com-mon brand character. This character is what differentiates each maga-zine, providing a coherent, integrated vision for its brand. However, each magazine covers a variety of topics that interest a variety of peo-ple. The editors do not expect every reader to read every article. Dif-ferent people with different interests will read different articles. And, at different times in their lives, as people’s interests change, they will be interested in reading different articles. Only a few people will be interested in every article in every edition.

Here is how we stated this for Advertising Age several years ago:

“Over the last decade, Brand Journalism has evolved to address and adapt to new, superior forms across new devices. In October, 2012, Lewis DVorkin, in Forbes , commented, “Welcome to the emerging world of brand journalism—mar-keters using the tools of digital publishing and social media to speak directly to consumers. The advertising industry commonly refers to it as content marketing, brands disinter-mediating news professionals by writing and distributing thought leadership content. It’s one of the most quietly talked about areas in the media industry today, ultimately destined to shake up 100 years of journalism.

“The concept of Brand Journalism is not only shaking up traditional views of brand management, it is also shaking up traditional views of journalism. Brand Journalism is evolving into content creation using journalistic skills: it is redefining what news is and how it should be communicated on behalf of a brand.

“Brand Journalism marries brand management and jour-nalistic storytelling. It takes both skill sets and merges them into an energetic communications platform. In our changed marketing environment, marketers need to focus on creating

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interesting, ongoing content that will attract and interest consumers, rather than relying on old-fashioned, simplistic, repetitive message pushing.

“Brand Journalism captures and speaks to the interests of in-terconnected consumers who want customized, connective content. Brand Journalism can be the most valuable tool in the marketing toolbox. Marketers have the chance of a life-time to connect and engage consumers with journalistic brand storytelling that customers will want to consume. In this new era, Brand Journalism will be an increasingly important part of marketing’s future.” 23

Endnotes 1. Go to Pearsonlloyd.com.

2. See Light, Larry, and Joan Kiddon, New Brand Leadership .

3. Nassauer, Sarah, “Sam’s Club Aims to Be Less Like Wal-Mart,” TheWall Street Journal , August 17, 2015.

4. Galagan, Pat, and Tony Bingham, “M’m, M’m Good,” T&DMagazine , March 2011.

5. Jargon, Julie, “McDonald’s: Survey—Franchisees Sour onCompany,” The Wall Street Journal , July 17, 2015.

6. Jargon, Julie, “Fast Food Turnaround: Popeye’s Louisiana KitchenCEO Cheryl Bachelder Talks About Her Secret for RepairingRelationships with Angry Franchisees,” The Wall Street Journal , March 10, 2014.

7. Koffer, Jacob, “Lego Wants to Replace Plastic Blocks withSustainable Materials,” Time.com/3931946/lego-sustainable-materials/.

8. Vlahos, James, “Barbie Wants to Get to Know Your Child,” The NewYork Times Magazine , September 16, 2015.

9. Johnson, Linda A., “Slower Soup Sales, Special Charge CutCampbell Net Income 6 Percent,” API , November 13, 2002.

10. FD (Fair Disclosure) Wire , Campbell Soup at Consumer AnalystGroup of New York, 2005 Conference—Final, February 23, 2005.

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11. McLannahan, Ben, TD Bucks Industry Trend and Sustains Belief inthe Branch: Toronto-Based Lender Has More Outlets in New YorkCity Than Bank of America,” Financial Times , August 17, 2015.

12. Maze, Jonathan, “McDonald’s Isn’t Just Losing Business toRestaurants,” Nation’s Restaurant News , July 24, 2015.

13. Undercoffler, David, “Toyota to Embrace Online Car Shopping:Taking a Cue from Scion Program,” Crain Automotive News , August 17, 2015.

14. Chipotle, “A Message from Chipotle Founder Steve Ells, The NewYork Times , November 13, 2015.

15. Tabuchi, Hiroko, “RadioShack’s Blueprint for a Rebirth,” The NewYork Times , April 6, 2015.

16. Wahba, Phil, “Back on Target?” fortune.com .

17. Nassauer, Sarah, “Sam’s Club Aims to Be Less Like Wal-Mart,” The Wall Street Journal , August 17, 2015.

18. Kroc, Ray, Internal Review, December 12, 1975.

19. Sommer, Jeff, “Cheap Coffee and the Starbucks Premium: WhyStarbucks Raised Prices on Some Brewed Coffee Even as the Priceof Beans Fell Globally,” The New York Times , August 16, 2015.

20. Please see various references to Brand Journalism in Six Rulesfor Brand Revitalization , and New Brand Leadership , Light andKiddon; also see Light, Journal of Brand Strategy , 2014.

21. Creamer, Matthew, “The Book of Tens,” Advertising Age , Crain Publishing, December 14, 2009.

22. Light, Larry, “Brand Journalism,” Advertising Age , July 2014.

23. Ibid, Light, Advertising Age .

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17 Rule 4: Reinforce a Results Culture

A results culture is one that is evaluated based on producing mea-surable results. It means having a clear relationship between execu-tive rewards and brand-business performance. A results culture rests on measurable milestones and rewarding people based on perfor-mance where progress is tracked in a Balanced Brand-Business Scorecard.

People manage what management measures, recognizes, and rewards. We need to create a Balanced Brand-Business Scorecard that evaluates whether we are producing the right results the right way. Certainly, this was the focus that Gordon Bethune applied at Continental. It is also what transpired at McDonald’s during the turn-around. Rich Floersch, who managed human resources and was the team leader of the people P, redesigned the management evaluation system. Performance against both business and marketing metrics increased salary and bonuses. When we worked within IHG, the rewards system for top management (including the CEO) became connected to brand-business performance.

All Growth Is Not Equally Valuable

There is high-quality growth and low-quality growth. Low-qual-ity growth actually destroys value even while revenues increase. But managing for growth is not enough. Our examples from Part I show that the best approach is for brand leadership to manage for high-quality revenue growth. And, with the new customer-perceived value equation, creating Trustworthy Brand Value is the basis for quality revenue growth. Quality revenue growth leads to enduring profitable

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growth. Enduring profitable growth is the path to creating sustainable increases in shareholder value. The Balanced Brand-Business Score-card measures the progress we are making toward achieving our goals.


The new value equation, Trustworthy Brand Value, is one of the key links between brand and business in the Scorecard. To create Trustworthy Brand Value, marketers must evolve their thinking from product management to brand management, from supply-driven management to customer-driven management, and, from thinking “how can we do it cheaper?” to “how can we do it better?”

On the one hand, Trustworthy Brand Value reflects the brand side; it increases as the brand delivers against the customer’s expec-tations. On the other hand, Trustworthy Brand Value generates high-quality revenue growth that in turn accrues Trust Capital in the brand’s and the company’s trust bank. Trustworthy Brand Value is the brand-business bridge.

We have said that enterprise capital comes in three forms: Finan-cial Capital, Intellectual Capital, and Human Capital. But there is a fourth form of enterprise capital: Trust Capital. Trust Capital is the customer confidence in the authority, credibility, integrity, leader-ship, and responsibility of an organization to deliver promises of value to stakeholders. Trust Capital creates value for the organization. But it emanates from the customer-perceived brand assessment based on the benefits received for the costs paid.

There are three rules-based practices for creating a results culture:

1. Measurable milestones

2. Recognition and rewards

3. The Balanced Brand-Business Scorecard

Measurable Milestones

The first step in building a results culture is to define measurable milestones.

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CHAPTER 17 • RULE 4: REINFORCE A RESULTS CULTURE 139

• What are we going to do by when?

• What levels of progress will be acceptable?

• What levels of progress will be excellent?

Managing for value begins with brand strategy and ends with business results. We must measure sales and profitability. We must measure and monitor changes in brand reputation. We must measure trustworthiness. Being a market leader requires sales volume. Being a profitable market leader requires brand loyalty.

Of course, the first step is to be efficient. This means reduc-ing costs by eliminating waste, increasing productivity of the avail-able resources, and optimizing allocation of limited resources. But efficiency cannot be the be-all and end-all. Financial discipline and operational excellence mean more than growing through cost cutting that increases margins. We once had a client who referred to this effi-ciency approach as raising the bridge or lowering the water. Either way, the end result would be increased margins.

Improving productivity alone is not a strategy for enduring pros-perity. The way to enduring profitable growth is by achieving a sus-tainable competitive advantage that increases sales and margins. To be enduring, build high-quality revenue growth.

Measuring progress is an imperative component in a meaningful, actionable Brand Plan to Win. Meeting measurable milestones is not an option. You need to know where you are headed and if you are making meaningful progress in getting there.

Recognition and Rewards

People manage what management measures, recognizes, and rewards. Leadership needs to define how progress will be measured. It is not enough to produce the right results. It is important to pro-duce the right results the right way for the right reasons. The “Plan to Win” performance measures ensure that the right results are being produced as a result of the right actions. It is important to produce the right business results. It is also important that these results are based on a strong brand foundation.

In 2002, McDonald’s was not a results culture. Brand image declined, the same-store sales declined, profits declined, and share

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price declined. Yet there was little correlation between executive rewards and business performance. Even though McDonald’s busi-ness performance was deteriorating, rewards continued to increase for top management. Results went down; rewards went up. This made no sense. Management rewards need to be placed in line with brand and business goals and shareholder interests.

In many companies, this same out-of-sync behavior of doling out rewards while the brand is in the doldrums comes from a sales-driven or manufacturer-driven mentality. Volume is the focus: push those items out the factory door; put people into vehicles regardless; sell before fourth quarter; open those new stores; discount to increase volume. Until leadership fixes the view that brand is just that “ad stuff” or the “image thing” that can be enhanced through a new font and logo, rewards will continue in the brand-debasing direction.

Recognition is not the same as monetary reward. Recognition is visible, public, and vocal praise, acclaim, and tribute in front of your team, your organization, or the entire brand or company. Recognizing efforts rewarded by money is a reward. But recognition of who has performed well is valued.

One of the best at people recognition is YUM! Former CEO David Novak was a master at supporting the employees through an extensive and coordinated recognition system. Every time someone was recognized, there was a picture of the recipient and the award with David and the team. David Novak hung these pictures on the walls of his office, and then the ceilings, and then up and down the hallways around his office. Each member of the leadership teams from the top down the management lines had a special award given for performance. And all these award pictures are hung on the office hallways around their offices. Never underestimate the power of rec-ognition and the celebration of that award. We have seen grown peo-ple cry when recognized by a leader for things as small as cleaning the external areas around the restaurant to become the “king of clean.”

The Brand-Business Scorecard

Since the original Six Rules book, the composition of the Brand-Business Scorecard has evolved. These additional elements are

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discussed in this section. However, even with the alterations, the basic ideas behind a Scorecard are the same. Building a Brand-Business Scorecard is an essential part of a disciplined brand man-agement process. It is a single integrated report card with metrics that represent business strengths and weaknesses as well as brand strengths and weaknesses.

The Brand-Business Scorecard has three key business perfor-mance measures and eight key brand performance components. Here are the brand performance measures:

• Bigger— Familiarity, Penetration

• Better— Brand Reputation, Overall Satisfaction

• Stronger— Brand Loyalty, Brand Preference Ladder, Trust-worthy Brand Value, Trust, Brand Power

Bigger

To show progress on getting bigger, the Brand-Business Score-card tracks brand growth in terms of familiarity and penetration—that is, how well the brand is known for something special, and how well the brand is building the customer base.

Familiarity

Familiarity is not the same as awareness. Awareness is a yes or no question. Are you aware? “Sure, I have heard of him, but I don’t have an opinion about him.” This is mere awareness. It is a light switch: on or off. There are no degrees of awareness: it is binary. Unfortu-nately, many researchers and marketers use awareness and familiarity interchangeably. This is wrong. Familiarity is more than mere aware-ness. Asking for opinions among respondents who are aware but not familiar provides unreliable, unproductive answers that are a waste of time, money, and effort. Familiarity is not an absolute measure; it is measured in degrees, from extremely familiar to not at all familiar.

Penetration

It is always important to gain new customers. Penetration refers to having more customers; growing the customer base is important. Penetration means growing the customer base, with the marketing

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goal to increase both penetration and loyalty. Brand loyalty refers to having customers purchase more often, building brand preference, and reducing price sensitivity. Attraction and retention are important and are one of the bottom-line goals of the Plan to Win. Attracting customers to a brand is an ongoing, everyday marketing goal. Build-ing loyalty within a declining customer base is just slowing the rate of brand death.

This is an ongoing discussion regardless of decade: which is more important for my brand, generating more customers or creating more brand loyalty? Both are critical measures for any brand. The bottom-line objective needs to be the combination of more customers, more often, more brand loyal, more profitable. The brand wins when it throws off the tyranny of the or and maximizes the and . Penetration and loyal frequency suffer when a brand gets into trouble. In Sep-tember 2002, it was clear that the McDonald’s customer base per store was decreasing. If that trend had been allowed to continue, the end game would have to be that the last customer would have to visit McDonald’s 50 million times per day just to maintain McDonald’s volume!

It is quite possible to have increased brand loyalty among a shrink-ing base of customers. But increasing loyalty among fewer customers is a risky business. Jaguar found this out as its customer base dwindled. During the early 1990s, as Jaguar was dying, The Wall Street Journal reported on the front page of its marketing section that most die-hard Jaguar owners they interviewed were so committed to driving their Jaguar, they had two. Why? One Jaguar was always in the shop being repaired. Jaguar loyalty scores were extraordinarily high. But the die-hard group was extremely small. They never gave up on the brand.

There is a strong belief today that McDonald’s is back in the same position of losing customers and having difficulty attracting new ones. The loss of focus on fixing the core products; the seeming lack of strat-egy; the loss of the relevant differentiated Promise, and all the other troubles are allowing the current base leeway to go elsewhere. And this situation is not motivating potential customers to try McDonald’s. Today’s challenge seems eerily familiar to what we encountered in 2002, when the majority of McDonald’s most frequent customers were not loyal to the McDonald’s brand. McDonald’s most valuable

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customers did not have a favorable view of the McDonald’s brand. Brand loyalty is more than a repeat purchase. Brand loyalty is a repeat purchase based on a commitment to the brand. This means that the customer believes a particular brand is the superior alternative for sat-isfying his or her particular need in a particular context. It means that your brand is his or her favorite—the brand preferred, the brand that will be bought again, the brand that will be willingly recommended.

The ongoing brand opportunity is to continuously attract cus-tomers and to create a positive experience so that they return and are more loyal. This means creating and reinforcing an enduring and profitable bond between a customer and a brand. We cannot build a successful brand focusing only on customer attraction. Attracting new customers who do not return is a fool’s errand. But relying on repeat customers within a declining customer base is also a risky business.

When it comes to the bottom-line brand-business goals, our goals are to attract more customers with greater frequency and increased brand loyalty and with increased profitability.

Better

Getting bigger is important. But generating bigness for the sake of sheer size is a waste of resources. The brand-business goal is to be better, not just bigger. Be bigger by being better. Brand leaders need to show continuous improvements in the way the brand is perceived. Are we perceived for the things we want to be perceived for? Are our customers satisfied? Where are the issues that need to be addressed?

Brand Reputation

Is the brand delivering on the Brand Promise? Is the brand deliv-ering against its agreed upon defining elements? A relevant, differ-entiated brand is a multidimensional promise. It is essential to truly understand the relevant differentiation of the brand and include specifically designed metrics to reflect these dimensions. Designing Brand Promise metrics for your brand requires truly understanding the elements of your brand’s Claim and Character and then custom-izing the relevant, differentiated attributes. This means creating your own list of measurable attributes that will allow for the best, most clear assessment of your brand. Omnibus, standardized studies that

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promise you will save money if you use their standardized list, provide a weak brand picture at best. Avoid generic omnibus lists with items such as “tastes good,” “good value for money,” “modern,” or “conve-nient.” How are these items relevantly differentiated for your brand? In most cases these are category definers or “greens fees.”

For example, Olive Garden runs lots of advertising in a variety of media. From observing and listening to its communications, it makes sense that Olive Garden is selling an Italian-inspired experience of camaraderie with an abundance of Italian essentials on the menu. It seems to want to be perceived as fun, upbeat, convivial, and exuding a sense of togetherness. If the restaurant were a person, we surmise that the intended brand personality would be generous, warm, invit-ing, informal, friendly, congenial, and devoted to good, convivial eat-ing experiences.

With this description, it would not be wise to measure the Brand Promise using generic, standard statements of so-called brand equity such as “High-quality food,” “Food tastes good,” “Affordable.” How do these help you manage the brand’s progress toward its Promise of Italian-inspired, generous, family-style meals in a casual, convivial, environment?

Overall Satisfaction

Brands and organizations rely on overall satisfaction scores for many things, including executive bonuses and employee performance reviews. Most post-usage follow-up questionnaires use some kind of satisfaction measure. Customer ratings on websites use satisfaction.

The more sophisticated the customer, the more informed people are, the more we find that although satisfaction is good to have, it is no longer sufficient. Before JD Power, for example, the automotive industry was uneven in its quality per vehicle. Quality differentiation was easier to communicate. But as quality rose among all the brands, quality differentiation became less observable by new car owners. In the 1990s, there was little meaningful differentiation on overall qual-ity between many automotive brands.

When it comes to customer satisfaction, the competitive bar of cus-tomer expectations is raised. Yet many marketers aim for acceptable

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satisfaction levels. They aim for good enough rather than “perfection.” True, perfection may never be achieved, but why aim for anything less? However, some clients are pleased with 80% satisfaction and very pleased with 90% customer satisfaction ratings. The result is that they are comfortable with the fact that 10%–20% of their customers are not satisfied every day! Being better than average across average occasions averaged over time is not good enough. Raise the bar; aim for the highest levels of satisfaction on whatever metric is being used. Average scores lead to average performance. Average is for losers; excellence is for winners. Aim high. Aim for perfection.

Satisfaction is relative. By relative satisfaction, we mean satisfac-tion compared to competition. One client we worked with did not measure brands against competition in the satisfaction question. The problem was that the client saw his brands’ satisfaction improve. This was good. However, in the real world, the competition was increasing significantly. This was not good. Measure satisfaction not just among a brand’s customers but also among the customers of competitive brands.

Stronger

Building brand strength builds brand value and helps brands withstand competitive pressures.

Brand Loyalty

Before we describe the metrics, let’s remind ourselves about why brand loyalty is so critical. Building sales volume is important, but for enduring profitable growth, we must build both quantity of sales and quality of sales. And, as we will discuss in Chapter 19 , “Rule 6: Real-ize Global Alignment,” the imperative is to align the enterprise cul-ture around these two initiatives: building both quantity and quality of sales. Doing this well means ridding the culture of a “sales is all that matters” mentality. It means instilling the concept of “building sales based on brand loyalty” into the culture. Brand loyalty anchors quality of sales. It builds high-quality revenue growth, which needs trustwor-thy brand value to increase. Because there is no shareholder value without brand value, brand loyalty becomes an important element

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for enduring profitable growth. The enterprise must show metrics for brand volume (sales) and brand value (loyalty).

This idea is so much easier to define than to do. Cadillac is focus-ing on its American luxury car heritage to rebuild its brand. Johan de Nysschen, Cadillac’s global chief, understands the weight of this mission. Can he build long-term growth while helping Cadillac’s dealer base with shorter-term sales? Mr. de Nysschen knows the brand requires care. In an interview, he said, “Right now, we have to put image development ahead of sales development.” 1 Our view is that both short term and long term must be implemented at the same time. Sales development keeps the brand alive in the minds of the customers and prospective customers...and, of course, with fran-chisees. But customers would like a brand they can commit to over time. As part of the brand building strategy, Mr. de Nysschen raised prices for the popular models and decreased incentives. Give Mr. de Nysschen credit for elevating the quality-of-sales half of the balance. Usually, the reverse is true; normally it is focused on volume at the expense of brand.

Here is the analysis in Crain’s Automotive News as expressed by the VP industry insights director at True-Car: “There has been a phe-nomenal drop in incentives.... Cadillac needs to stay disciplined. Still, the higher transaction prices have coincided with shrinking sales vol-umes. That brings its own set of problems, such as lost market share and disruption to supplier volume targets. An alternative is to reduce prices to protect market share—and potentially expand it by offering the right value equation to would-be-buyers. Getting more vehicles out there will spread the gospel of your reinvented brand.” 2

Nissan took a slightly different approach. Although there was enormous discipline on pricing and incentives, getting more lower-quality, poorly perceived vehicles into customers’ garages and out on the road was not seen as a viable option. However, changing the cus-tomers’ perceptions of Nissan was critical. To help customers see that Nissan was going back to its well-thought-out Japanese performance heritage, it redesigned the Nissan (originally Datsun) 280Z. And each U.S. dealership had only two or three available. The vibe around the 280Z was incredible. And it reassured Nissan customers that the com-mitment to better performing, more attractive vehicles was real.

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Brand Preference Ladder

A brand preference ladder is a staircase leading from non-usage to true brand loyalty; it is a reflection of the strength of the commit-ment the customer has to the brand relative to competitive brands. Moving customers up the ladder from commodity consideration to true brand loyalty can have a big impact on revenues and profitability.

Commodity consideration means that customers view a set of brands as being basically the same. The customer is actually indiffer-ent and is willing to consider any of these brands. So the differentiator is often merely convenience and price. “Willing to consider” is not the same as, “I would put this brand on my short list of brands that I prefer.” Being willing to consider is one thing, but moving to being on the short list is a definite competitive advantage.

Short list brands are defined as the small set of brands that are among the customer’s top three choices. Being on the short list is good, but it is not good enough to be a truly strong brand. It is better to be the preferred alternative within the short list.

Preference means that of the three brands on the short list, this brand (hopefully your brand) is the one that a customer prefers. In other words, this is his favorite. Preference is a much stronger con-cept than satisfaction. For example, customers can be satisfied with a particular brand of detergent. However, they may also be satisfied with two or three alternative brands. So they buy the brand that is on sale that week. Satisfaction is necessary, but it is not sufficient. We need to build preferred brands.

The ultimate goal is to move a customer from preference to true brand loyalty. Loyalty is not the same as frequency. Too many so-called loyalty programs build frequency but do not really build loyalty. They build frequency through bribes. They build deal loyalty rather than real loyalty. True brand loyalty is based on a customer’s commit-ment that this brand is the best value.

True brand loyalty is the highest level of commitment on the Brand Preference Ladder. Brands in this category are preferred even though there may be a price premium when purchasing. So imag-ine that a customer’s second choice is 10% less than the preferred, favorite brand. In our metric, a loyal customer would still choose the preferred brand even though her second choice is 10% less. The

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ultimate brand goal is to increase the number of people who express true brand loyalty.


Marketers often talk about value as low price. We say that this is unfortunate. As we pointed out earlier, value is much more than a price point. Brand value decisions need to be strategic. What is the customer-perceived fair value for our brand? How are our market-ing efforts affecting customer-perceived value? Is price sensitivity increasing or decreasing?

The world does not stand still. A brand may be offered at the same price that worked in the past. But today, that same price is too high compared to competition. Your brand may not be able to sustain a price today that was considered fair and reasonable in the past. Why? Is it the marketing? Is it changes in quality perception? Is it evolu-tion of the competitive environment? In this increasingly competitive world, excessive emphasis on price incentives may have severely dam-aged brand loyalty and brand value. Or the brand may have stood still while alternative brands have improved and evolved, raising customer expectations. As we say throughout this book, building Trustworthy Brand Value is essential for enduring profitable growth.

Trust

Trust continues to be a critical issue in marketing. It is an impor-tant component of the Trustworthy Brand Value equation. Brand trust affects many intersections with customers. Do people trust your brand and see it as a trusted information resource? Do they trust what your brand claims and trust that you are doing the right things in the right way? Do they trust what you say about social responsibility? Measure your brand’s trust.

Trust is a multidimensional idea that underpins and drives rela-tionships. Trust is not a single question. Multiple research studies on trust over the decades show that trust cannot be determined by simply asking, “Is this a trustworthy brand?” Although each research study includes different items in the trust battery, the key is identi-fying the brand-relevant “attributes” of trustworthiness. It is best to include multiple ways to determine trust.

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For example, all these items provide an aspect of trust; no single item will measure trustworthiness:

• This brand always meets my expectations.

• This brand cares about the environment.

• This brand is socially responsible.

• This brand uses sustainable practices in its business.

• This brand is ethical.

• This brand is reliable.

• This brand can always be relied on.

• This brand is consistently high quality.

• This brand is an ethical brand.

• This brand is a genuine brand.

• This brand is an honorable brand.

• This brand is an honest brand.

• This brand is a knowledgeable source of information.

• This brand does not make false claims.

• This brand is open in dealing with people.

• This brand keeps its commitments to me.

Brand Power

There are many definitions of what makes a powerful brand. But all these tend to incorporate similar components as essential for build-ing brand power. A big brand is not the same as a powerful brand. For example, in the early 1990s, a brand power study for a durable good client showed a brand (not our client’s brand) with high brand power. But the research also indicated that this high-brand-power brand was a small brand. Some in the room were dismissive of this small but powerful brand. Its small size led them to believe they could ignore this entry. The small brand already had brand loyalty even though it was expensive. The brand was Dyson. The small, but powerful Dyson brand disrupted the market.

As we mentioned earlier, repeat purchase is not necessarily a sign of brand loyalty. Do not assume that repeat behavior is an indication

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of brand loyalty. A non-loyal repeat purchase is a threat to brand value. Educating a generation of customers to repeat only because of price and convenience does not build brand value; it destroys brand value.

We look at brand power in terms of three dimensions: familiarity, specialness, and authority. As discussed earlier, familiarity is not the same as mere awareness. Familiarity means that the customer is not only aware of the brand but feels he is sufficiently familiar with the brand to express an opinion about it. Specialness means the combina-tion of both relevance and differentiation.

Authority is the combination of perceptions of overall quality, leadership, and trustworthiness. Quality is driven by a perception of consistent conformance to expectations. Leadership is driven by an image of not only leading in size, but also leading in thought, popular-ity, and innovativeness. Trustworthiness is based on a reputation for credibility, integrity, and responsibility.

Brand power should be evaluated against the competitive set as perceived by the customer. It is nice to know how your brand rates. But when it comes to making money and satisfying customers, it is necessary to win within the brand’s competitive set. The competitive set must be seen through the eyes of the customer.

This is why segmentation is so important. Analysts and others are questioning whether Chipotle really is the major competitor for McDonald’s. We spoke of this earlier. The customer-defined com-petitive set is the only set that matters. Think about air travel and eating. If you are a business traveler in coach and you are about to board a flight home, you may need a meal to eat on the plane. The air-port food court creates the competitive set, and there are now lots of options. Your needs may be the ease of carrying the meal one handed (pizza does not lend itself to the one-handed carry) or the tidiness of eating the meal on a cramped tray-table. You may choose an item that does not have a strong odor if you do not want to offend your neighbor. Do you want something that requires a plastic fork? These needs would be quite different from the needs you would have if you were considering the same restaurant brand in the strip mall near your home with a friend.

As times change, the customer-perceived competitive set changes depending on the occasion. If you and your team are not as current

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on your customers’ needs and occasions, you could make a costly mis-take. We had some meetings with a C-suite leader. The business was in trouble. It was a specific retail, UK-based business that was expand-ing globally and on the Web. When asked what the competitive set was for this business, the client said it was Tesco and Sainsbury, even though the business did not sell food. Customers were buying the products he sold in his brand’s bespoke stores at lower prices, with more convenient locations at super store supermarkets. The market-ing team had not originally thought about this possibility.

Building brand power can have a powerful effect on brand value. For a marketer in durable goods, we determined that a 10% increase in brand power led to an incremental $57 per unit. Building brand power pays. A viable Brand-Business Scorecard must reflect both business results and brand results. In addition to establishing the met-rics, aligning an organization around these common metrics is easier to say than to do. It takes a lot of persistence and fortitude. Building a proper Brand-Business Scorecard needs to be a balance between both business performance and brand performance. The results of the Scorecard should influence the recognition and the reward of the leadership.

Additional Considerations

Here are some additional considerations you must understand and address to create the best Brand-Business Scorecard. These appeared in our New Brand Leadership book but are evolutions from the time of the Six Rules book.

The Five Action Ps

The metrics in the Plan to Win must include a few specific met-rics associated with evaluating the effectiveness of the Five Action Ps. Align all Plan to Win actions with metrics. There must be specific measures for:

1. People, such as friendly, helpful, well informed, represent thebrand well

2. Product or service, such as quality, speed of service, andaccuracy

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3. Place, such as clean, convenient, modern

4. Price, such as fair value, affordable, range of prices

5. Promotion, such as brand familiarity, Brand Promise, and brandtrust

Measures like these allow us to assess progress on the actions we are taking to move our brand forward. The actual measures need to be customized to reflect the specifics of the Five Action Ps.

Relinquish the Reliance on Normative Data

It is in everyone’s best interest to ensure that the brand uses common metrics. Most finance departments have the same measure worldwide. So should the brand. It is not unusual to have each country use a different measure for quality, satisfaction, or value for money. With one client, it took more than six months to achieve agreement on how to measure quality. The researcher in charge of this project had the diplomacy skills and patience of a UN negotiator. He deserved a medal. Why? All regions agreed they needed a standard metric world-wide. However, no geography wanted to give up its favorite measures. They based their stubbornness on years of experience with their met-rics, and they have “norms”—the normative data collected over the years. However, in a world that spins quickly, “norm” is losing a foot-hold. “Norm” no longer defines success. And when real-time online ratings and rankings take precedence, your normative data seems stale.

By embracing normative data, a brand team strives to be merely average or somewhat better than a historical average. A “norm” is something typical, expected, usual, and average. This is not the same as aiming to be the best or aiming for perfection. The standard is not defined by norms; it is defined relative to competition and relative to the vision of perfection. Are we doing better than our brand’s key com-petitors, and are we making progress toward our agreed destination?


The new value equation means that brand teams should be more precise by customizing their measurement items for assessing cus-tomer-perceived Trustworthy Brand Value. There are real differences between an emotional benefit and a social benefit. Value is more than asking if the brand is a good value or gives you value for your money.

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Because each brand has its own Brand Promise, the lists of statements cannot be generalized.

Here are some ways to think about the concepts in the new value equation. Remember the equation has the customer costs (money, time, and effort) and the expected experience (functions, emotional and social benefits). Please use the idea behind these items while customizing for your brand; these are general areas that you should consider in a way that reflects your brand. And remember, no single item can capture some of these concepts, so be prepared to include multiple statements. We included items defining trust earlier.

Value

This brand is not worth the money. This brand is a good value for the money. I consider this brand to be a good buy. At the current price, this brand is not a good value.

Money

The price of this brand is acceptable. The price is low. The price is high. This brand is offered at a fair price relative to others. I am satisfied with the price I pay for this brand. The price is lower online. The price is higher in the store. The price fluctuates too much.

Time

This brand is a waste of my time. This brand puts too many demands on my time. With this brand I find myself doing things hastily. This brand helps me save time. This brand helps me maximize my time. I lose time using this brand.

Effort

It takes too much effort to find this brand. It takes too much effort to use this brand. I am not willing to make the extra effort needed to buy this brand.

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This brand is not worth the effort. It takes too much effort to find this brand. I do not feel at a loss choosing this brand. This brand requires too much of my energy. It is very clear how to use this brand.

Functional

This brand is useful to me. This brand fits into my lifestyle. This brand is different from others. This brand is an innovative brand. This brand is a good choice for me. This brand is a high quality brand This brand is a leader in the category. This is a very popular brand. This brand is simple to use.

Emotional

I feel good about using this brand. I feel cared for. I feel competent. I am attached to this brand. I am comfortable using this brand.

Social

With this brand I feel that I have status. I am respected. I am connected to others. This brand reflects the kind of person I am. With this brand others see me the way I want them to see me. This brand is me.

Endnotes 1. Colias, Mike, “De Nysschen’s Cadillac: On Track But a Slow One—a

Year In, He’s Made It Clear There’s More Work to Do,” CrainAutomotive News , August 17, 2015.

2. Ibid., Colias, Mike, Crain Automotive News .

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18 Rule 5: Rebuild Brand Trust

Trust is becoming a precious asset for institutions and brands. Trust in institutions—governments, universities, religions, and busi-nesses—as well as trust in experts and celebrities—is declining at a steady rate. Institutions everywhere become less trusted year to year. Trust in brands is declining as well. A report cited in The Economist indicates that in “North America, consumers say they trust only about a fifth of brands.” For Europeans, it is nearly one-third of consumers. “About one-half of American shoppers say they trust small companies to do the right thing, compared with just 36% who say the same of large companies.” 1

Building trust as a source of organizational wealth is an important driver for enduring, profitable growth. As we show with the new value equation, trust is a value multiplier. As trust increases, so does brand value. If there is no trust, there is no value. Trust Capital is one of the components of organizational wealth. Creating Trust Capital allows a company or a brand to generate a trust reserve that helps through crises of brand or corporate character. A trust reserve of Trust Capital builds strong relationships over time. Trustworthiness is a key compo-nent of Brand Power.

A powerful brand is more than a trademark; it is a trustmark. Trust is an important prerequisite for building long-term brand loy-alty. Without trust, there can be no brand loyalty. When you trust a brand, you become committed to it. Trust is the most important pre-requisite for building long-term brand loyalty. It facilitates persuasion and the acceptance of new information. Trust is a relationship crite-rion more than a transaction criterion.

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How Do We Define Trust?

There are more than 100 different definitions of the word brand . It is the same with trust . Each educational, social, scientific, eco-nomic, political, psychological, marketing, or other academic or busi-ness function has its own slightly different way of defining trust. The only thing these have in common is that they all view trust as an essen-tial element for any type of relationship building. Trust matters.

Some have defined trust as “a generalized expectancy held by an individual or group that the word, promise, verbal or written state-ment of another individual or group can be relied upon.” 2 We define brand trust as the confidence you have relying on a brand to live up to its promises.

Trust cannot be bought; it must be earned and re-earned. It accu-mulates over time. It is lasting, but when it is damaged, the bond can break quickly. Trust can take years to build, and it can be lost overnight. Trust is a necessary ingredient for long-term commitment. And, once a brand bond is strengthened, it is difficult to break. When it does break, it can break with suddenness. Although trust is a valued prize that takes time to build and adds to the bottom line, it can slip through fingers easily.

The practice for rebuilding trust is extremely challenging. It means building internal and external commitment and amassing Trust Capital.

Internal Commitment

At Arcature, we have a four-point process for brand-driven inter-nal marketing that builds trust. Although there are four separate “buckets” of actions, they are all connected in an ongoing virtuous circle. Brand building never ends. Trust building never ends.

Here are the four points for building internal commitment:

1. Education

2. Implementation

3. Inspiration

4. Evaluation

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CHAPTER 18 • RULE 5: REBUILD BRAND TRUST 157

Education answers the following questions:

• What are we doing?

• Why are we doing it?

• Why now?

• What does this mean to you?

These questions are personal. People must know what is going on and how it affects them. Even if what is happening is not a massive change, it is essential to ground employees in the need-to-know details that affect them. Tell people the benefits. Tell people the game plan. Openness and honesty help build trust. Even if there is not a crisis or a true sense of urgency, give people the chance to know what the opportunities are and what the challenges will be. Let people know what the Brand Purpose and the Brand Promise are.

Provide opportunities to learn about the brand and the Plan to Win and how it affects everyone regardless of function or geography. Use video and digital devices. Use apps and activities. Use brochures, audio, podcasts, and customized and personalized communications. Run seminars both online and in person. Do whatever it takes to edu-cate people about the brand. At McDonald’s, in 2003, we initiated an online branding course. The plan of learning at Hamburger Univer-sity was augmented with the refreshed brand Plan to Win. We distrib-uted a laminated Plan to Win, a brand dictionary, and a brand essence CD, in addition to a book on selected thoughts from Ray Kroc. A beautiful Brand Book brought the brand to life, as did a more whimsi-cal booklet.

Implementation addresses what the brand is doing now. What are the expected behaviors right now? Provide help for everyone, and ask if they want to provide help. Ask employees about barriers, and then discuss ways to overcome any obstacles to implementation. Let people know that if there are bureaucracies, silos, or anything else that will hinder the brand project, these structures and systems that undermine implementation will change.

One of the best ways to do this is to create a cross-functional team (CFT). In New Brand Leadership we discuss CFTs. The combination of functions, geographies, and levels of individuals with different ways

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of thinking and approaching problems and solutions is an effective way to support the brand. Create and inculcate a brand dictionary because language matters. Just as geographies have common mea-sures for quality, satisfaction, and value, each geography and func-tion has its own language. Further, people who come from other organizations—and, worse yet, outside consultants from large firms with standardized approaches such as BCG or McKinsey—have their own languages. Create your own brand dictionary. A common lan-guage not only facilitates better communication, but facilitates better collaboration.

Inspiration is all about reinforcement. Create interest, confi-dence, beliefs, passion, and excitement. Ensure that leadership does not just say the right things; leadership must do the right things. Once people know the whys and wherefores and start implementing prop-erly, continue to reinforce the mission. Brand building is an ongoing, never-ending process. Just because the activities are in play does not mean that they become business as usual once they are completed. Inspiration means constantly communicating: keep people aware, knowledgeable, and up to date. Reinforce the brand programs by using the common language. Redefine job objectives: people may find that their job now has an additional activity and accountability. Some people may have one fewer responsibility. As we discussed in “Recognition and Rewards,” in Chapter 17 , “Rule 4: Reinforce a Results Culture,” look for ways to celebrate performance improve-ments, and always create “wins.” Anchor in shared values through communications and behaviors. Use PR and internal PR to support the great efforts of team members, regardless of where they work and what they do. Show the employee base that they are valued by sharing information with them ahead of the press or the public. People come first.

Evaluation means that if it is important enough to do, it should be measured. Measure progress. Learn from failure and set short-term goals. Have a consistent evaluation system. Work on improve-ment. Articulate correlation between program success and business success. As with all metrics, make these clear, global, and customized to your internal situation. And have one set of measurements. We worked with a client that did reorganizations every six to nine months with outside consultants. There were so many different blueprints

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with different code names that a crib sheet of acronyms and processes needed to be prepared for the Board of Directors. This is a colossal waste of resources. And it is confusing.

External Commitment

Rebuilding trust is a significant component of brand revitaliza-tion. The importance of building trust is just common sense. But it is also true that in many instances common sense is not common in brand management. Trust takes time to build. It can also disappear in no time.

Brian Williams, the NBC network news announcer, exagger-ated and fabricated stories in which he became the hero. When this became public, the Brian Williams brand lost trust instantaneously. It remains to be seen whether the viewing public will ever invest him with the levels of trust they had prior to his fall from grace.

The VW car company is currently in a “distrustful” position because the world now knows about the global emissions-defeating software in various diesel models. As the crisis continues, the press and commentators agree that rebuilding trust will be a huge issue for VW.

In 2006, Canadian Prime Minister Stephen Harper was elected with a strong pledge of accountability and trust. Expense account scandals by his aides and fundraising inconsistencies hurt Harper’s credibility. As Financial Times cried out in its headline, “Issue of Trust Hounds Canada’s Prime Minister.” 3 Saying, “trust me” is not necessarily a sign of trustworthiness. Actions speak louder than words. Mr. Harper’s perception that he has a lack of trustworthiness may have contributed to his recent defeat at the hands of Justin Trudeau.

Dissipation of trust applies to people, brands, companies, all insti-tutions, and nations. For the past 6 months, the world has watched the back-and-forth on the EU and Greece and the International Mon-etary Fund (IMF). The articles have had many different points of view. What they have in common is the loss of trust that global citi-zens have in the EU and the IMF when it comes to dealing with its constituent members.

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To build external trust, here are five principles of trust building. These are significant and proven behaviors to help the revitalization of a brand:

• You are what you do.

• Lead the debate; do not hide from it.

• Openness is an opportunity.

• Trustworthy messages must come from a trustworthy source.

• Be a good citizen.

You Are What You Do

You must display trust before you can declare it. Customers must consider your brand worthy of trust before they commit to trusting it. As we just pointed out, saying, “trust me” does not track with today’s customers. People are too skeptical, cynical, and informed. Provide iconic tangible, visible evidence that what you are claiming can be trusted. Iconic products or services are tangible demonstrations of the truth of your claim. When revitalizing a brand, it is not enough to say, “We are listening to you.” “We are changing.” Iconic tangible expres-sions of this claim of change are essential.

When Cheryl Bachelder took over as CEO of Popeye’s, she invested in listening to customers. She listened to the franchisees. And then she incorporated their issues into the new restaurant redesigns. Franchisees could see their recommendations. The iconic changes at Domino’s were based on customers telling the pizza chain that the food is dreadful. Not only did Domino’s change; it did it publicly in ads on TV.

Trust is the confidence that a brand will live up to expectations. This means that the promised expectation of the brand can be relied upon. Do not overpromise. Promise what you can deliver and deliver what you promise. American Airlines (AA) is part of a global code-share partnership called One World. It must be a euphemism for a better place that does not yet exist. Have you ever tried to convert British Airways (BA) miles to AA miles or your AA miles to BA miles? Have you tried to use your AA status on US Airways’ system? Have you tried to enter a BA lounge with an Admiral’s Club card? It is not

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One World. And, unlike the restaurant chain Domino’s, AA does not seem interested in providing the reality of seamlessness that it prom-ises in its communications.

General Motors has serious problems with many of its vehicles. The press continues to let us know that even if your vehicle has been recalled, it could be years before it will be fixed. The parts are not available. People have died. Yet GM cannot find the will to fix the cars faster. When you are in charge, you must act accordingly. If you can-not deliver a safe vehicle, you are breaking the ties of trust.

Actions speak louder than words. When there is no action even though you promise it, people lose trust. This is one reason the pub-lic looks askance at social responsibility programs with sunny slogans, or “green washing,” but ending up with no action. In contrast, when Steve Ells, CEO of Chipotle, could not find enough of the pork he needed for his burritos, he told customers that he would not serve anything less. He asked customers to wait until Chipotle could supply all its restaurants with the quality of pork living up to its standards, including the raising and killing of the animal. This is what “Food with Integrity” is all about.

Lead the Debate; Do Not Hide from It

“The leader has got to be willing to take risk, stick his neck out, be optimistic, be progressive.” 4 Staying silent when there are big issues at stake is not a signal of leadership. Silence means agreement, and trust is too important for silence. Leaders stand up for what they believe in.

Domino’s could have taken a defensive position when customers complained about the quality and taste of their pizza. Instead, the brand agreed the offerings were below par and told us so in national television advertising. If you are in the food business and you are sell-ing food people think is dreadful, fix it. Going on the defensive is the wrong approach. For a brand to be taken seriously, a defensive posture implies that you have something to hide. When you are silent or when you hide, others can create the truths about you. Others will recast your profile. A brand will have a reputation. The only question is who will have the strongest voice in managing that reputation. It is not in a brand’s interests to let outsiders trample on a brand’s truths.

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When we wrote our article for The Wall Street Journal on how to fix McDonald’s, fixing the food was one of the points. Yet, in his turn-around plan broadcast to analysts, on the Web, Steve Easterbrook never mentioned fixing the food. Now, at the time of this writing, there are indications that the burgers will be cooked differently and the buns will be toasted differently.

Facing the facts is essential for trust building. The facts are that there has been a decline in the quality of the core items on the McDonald’s menu. The answer has been a focus on new products. Domino’s has new products. In fact, it has so many new non-pizza items that it changed its name (again using heavy media rotations) to tell us so. However, it first fixed the core menu items.

Leading the debate means taking a stand in what you believe. Do you, as leader of a brand, believe in that brand enough to step out of the comfort zone? At InterContinental Hotels and Resorts, the celeb-rity chef of the UK property, Theo Randall (TV personality, cookbook author, UK chef with global reputation) created a children’s menu for the InterContinental Hotels brand, not just the hotel in which his restaurant resides. With the help of a children’s chef and nutritionist, Annabelle Karmel, he looked at the children’s menus of hotels and said more can be accomplished and in a far better way. His belief is that children who are guests at his restaurant should not have to suffer with the regular fare of spaghetti, chicken nuggets, and pizza. Why not offer a special menu for children who are traveling with sophisticated in-the-know parents? Now the entire InterContinental Hotels chain offers this menu, delighting children and parents around the globe.

Sometimes Wall Street and analysts punish you when you speak the truth. This happened recently with Twitter. CEO Jack Dorsey provided a highly candid assessment of Twitter’s failures when quar-terly results were released in July 2015. Unused to “truth,” Wall Street punished the brand, and Twitter’s stock fell 11% in after-hours trad-ing. As Mr. Dorsey put it, the brand is putting a lot of effort into revi-sions to the business model, hoping to make it easier for marketers to connect with customers around live events. He made it clear that what the company was doing had not yet had a meaningful impact on Twitter’s numbers. He said that this is “unacceptable” and that Twitter is not happy about it. Mr. Dorsey said that he was not pausing

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execution but moving forward to make the brand experience easier. However, he did add that he was not sure what Twitter is doing will satisfy impatient investors. 5

Rather than hide from an issue, lead the debate. Take positive action. Tell your story. Michael Donahue, former PR director for McDonald’s USA and part of the original creative team for LYFE res-taurants, frequently reminded everyone, “When you tell your story you win. When you are silent, you lose.” Trust leadership is more than just standing out. It requires speaking out. In revitalizing a brand, it is nec-essary to speak up for your brand if you want your brand to stand out.

Openness Is an Opportunity

Transparency is a key to trust. This is because transparency requires truth. However, truth is not the same as trust. Truth is a fact, a feeling. To build your brand into a trustmark, you need both truth and trust. To be worthy of a customer’s trust, people need to see the truth and not just read about the truth.

Transparency and openness are important aspects of trust build-ing in a brand revitalization program. There are ways to do this that make sense, and ways that seem to defy common sense. During the 2002–2005 turnaround, France had to deal with issues threatening the quality and reputation of McDonald’s. Denis Hennequin, president of McDonald’s Europe, created the Open Doors program. Teach-ers, parents, and children became visitors to McDonald’s restaurants, viewing the kitchen, seeing how the food is assembled, watching the way the grills are cleaned and the floors are mopped, and having crew members and managers talk about the way the operation is run on a daily basis.

The concept was to literally open the doors of the restaurant to children, teachers, and parents so they could visit McDonald’s and its suppliers for a “behind-the-scenes” view. The media were invited, too. Everyone learned about the food, how it is delivered, how it is prepared, and how it is served. When the program began in France, it raised McDonald’s corporate earnings. This openness was a huge success. The premise was: “See for yourself. You can actually come into the store and see what we do.”

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McDonald’s has been fighting various rumors that undermine its brand credibility, most notably related to the quality and make-up of its food. In the spring of 2012, McDonald’s Canada launched a marketing campaign called “Our Food. Your Questions.” as a way to provide transparency about its foods. The ask-me-anything approach involved thousands of regular Canadians. Questions ranged from, “Are the hamburgers made from 100% real beef?” to “Are the ham-burgers made from ‘pink slime’?” McDonald’s posted replies online, either with text or a behind-the-scenes video uploaded to YouTube. In 2013, McDonald’s adopted a similar approach in Australia. In 2014, McDonald’s adopted this approach in the United States. As you can read in the online case, there is “openness,” and there is “open-ness”: in the United States, learning that there are 19 ingredients in a McDonald’s French fry was a surprise for customers who thought it was a potato, salt, and fry oil offering.

Some brands build openness into the Brand Promise and Plan to Win as an integral part of the brand. Chipotle is quite open about the factors that make up Food with Integrity . A customer knows the fair animal practices the brand promotes and the ingredient consciousness it supports. There is no sense that the brand is “hiding something.” UK retailer John Lewis is another brand with tremendous internal and external transparency. All John Lewis employees are owners, so there is tremendous openness in communications. As for the brand’s customers, the director of marketing, Craig Inglis, says: “Consum-ers are more empowered with information today than they have ever been and that means their expectations are high. There is nowhere to hide for brands that are anything other than fully transparent.” 6

In our open, fast-information-access, knowledge-sharing world, transparency is important. Increased emphasis on transparency affects the generation of Trust Capital. It is only a matter of time before the public discovers the facts about any issue. There are no secrets. There is nowhere to hide. More and more companies are committing to transparency in their operations and communications. It is easy to rely on traditional advertising to tell someone what a brand stands for. It is more convincing when others tell the story on the brand’s behalf. And it is even more convincing when people can learn the truth for themselves.

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Trustworthy Messages Must Come from a Trustworthy Source

In the 2015 Edelman Trust Barometer , the report states and graphs the facts that trust is evaporating globally. The only institution to show a slight improvement is government, and it is still less than 50% of the respondents. The most trusted media at the moment in the survey are Online Search Engines, which are now trusted more than traditional media: 72% (+8) vs. 64% (+2). 7

How you say things is as important as what you say, especially in a world where conversations occur online digitally and through blogs, apps, and with 145 characters. People are quite good at discerning what is accurate and authentic versus what is arranged and artificial. As the Edelman report continues, people trust the information from friends and family (72%) much more than a company CEO (46%) or a well-known online personality (45%). 8 Millennials are even more attuned to what is truth. Millennials and younger cohorts are more suspicious and distrusting than older groups.

Websites where people can communicate with total strangers generate ratings, rankings, and positive and negative commentaries that sway opinions. Just as peer testimony is more trustworthy than corporate testimony, the voice of the customer is more trusted than a corporate voice.

When we described the McDonald’s turnaround, we talked about the force of peer testimony. But we also discussed the role of expert testimony. It used to be that a Good Housekeeping Seal of Approval or the ADA logo on a tube of Crest toothpaste was a way to bring instant credibility to the brand. McDonald’s accomplished this for its salads when Paul Newman supported the brand with his Caesar Salad dressing. KFC attempted to bring instant recognition and credibility when it introduced its new Grilled Chicken on Oprah Winfrey’s show. Unfortunately, too many people asking for the free chicken coupon collapsed the website. The chain ran out of chicken. Rain checks had to be issued, and it took weeks to fulfill the orders.

However, as reported by Edelman and by others, expert testi-mony has less sway these days. A general skepticism about people who will “shill” for a brand has settled in to our common psyche. Why deal with experts who may not even use the brand when you can

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read opinions of like-minded other people? It is a more difficult and complex media environment than it used to be. When McDonald’s Australia linked with the highly respected Food Group to have this authority help create menu items, it was a really good idea. Today, people will immediately question the motives on both sides of the arrangement. Coca-Cola is facing just such a challenge now.

Sugar consumption in the world, and in the United States in par-ticular, is high. In the U.S., the FDA is recommending a limit to the amount of sugar an individual should consume in one day. The new proposed guideline suggests limiting sugar consumption to no more than 50 grams per day. One serving of Coca-Cola in its individual 8-ounce iconic global bottle has enough sugar to satisfy this recom-mended entire daily intake. 9 Recently, the August 4–10, 2015 issue of Bloomberg Businessweek had an overly pear-shaped, bottom-heavyCoke bottle on the cover with an exposé of the company’s trials andtribulations in a calorie-conscious world.

As an approach to tackle the growing concerns of the public and the medical, nutritional, and dietary establishments, Coca-Cola decided that to take on the obesity challenge to its flagship product, it would downplay the importance of a healthy diet and emphasize the importance of exercise. As The New York Times reported, “Coca-Cola, is backing a new ‘science-based’ solution to the obesity crisis: To maintain a healthy weight, get more exercise and worry less about cut-ting calories.” Coca-Cola joined with a “group of influential scientists” who are pedaling this idea at conferences, in medical publications and across all social media. As part of a huge messaging effort, Coke is providing “financial and logistical support” to a newly created orga-nization “called the Global Energy Balance Network, a non-profit, which promotes the argument that weight-conscious Americans are overly fixated on how much they eat and drink while not pay-ing enough attention to exercise.” 10 In our current environment, with childhood obesity a serious issue worrying parents and doctors, with diabetes soaring due to excessive weight, and with the incredible food awareness of the average consumer, such a message that “food does not matter but exercise is the answer” will not fly. People understand that exercise is important. But they also know that exercise alone will not work unless you cut back on a variety of elements, sugar being one of these. If you read the comments attached to the Times article

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online, you will see that the skepticism surrounding this pseudo sci-ence is extraordinary.

It is this kind of immediate response that moves mountains and makes a massive messaging campaign into a public, major mea culpa. The uproar of negative response and adverse publicity to this Coke “exercise-only” program has been so intense that on August 10, only 11 days after the article, Muhtar Kent, CEO of Coca-Cola, had to write an “apologia” for the opinion page of The Wall Street Journal . Titled, “Coca-Cola: We’ll Do Better,” Mr. Kent said, “Our company has been accused of shifting the debate to suggest that physical activ-ity is the only solution to the obesity crisis. There have also been reports accusing us of deceiving the public about our support of scien-tific research. We have read and reflected on the recent news stories and opinions, online conversations and questions from our own family and friends. The characterization of our company does not reflect our intent and values.” 11 Mr. Kent promised to divulge all monies and other support for organizations and research. However, the external reaction has been fierce and highly critical of the company’s behavior. Coca-Cola’s chief scientist, Dr. Rhona Applebaum, has left the com-pany and Coca-Cola says it will not replace her .

Providing trustworthy information is critical. The challenge is to become a trustworthy source of information that is helpful, conve-nient, understandable, and valuable to your customers. Become an open source of information that is understandable, accessible, timely, and trustworthy.

Be a Good Citizen

Being a good citizen has many different facets, but at its most basic it is about doing good deeds. There is a huge effort and allocation of resources at the corporate level in the area of doing well (business-wise) by doing good works. And being a good corporate citizen—once a company gets it right—helps the organization deliver enduring prof-itable growth in a complicated and uncertain world. Trust does not come from how big you are . It is a result of how big you act .

Corporate Social Responsibility (CSR) is an increasingly impor-tant way to build Trust Capital. People are concerned with more than

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just a brand’s features, convenience, and price. They examine their feelings for the brand and their feelings for the brand’s organization. “They also care about the social and environmental impacts of prod-ucts. Indeed, many ask questions like: Does this toy contain toxic sub-stances? Where do the materials in this garment come from? And are the production processes environmentally friendly?” 11

More and more, corporations are being held to higher standards when it comes to their behavior toward people, places, and things. People expect a corporation’s need to produce results. But they also believe that results and responsibility should go hand in hand. This belief in “planet- and people-friendly good works” is particularly important among younger generations. Having a positive corporate brand reputation is a positive business advantage.

Building trust through good works means more than mere spon-sorship. It is more than a once-a-year promotion supporting an annual run for breast cancer awareness or an annual Earth Day event, or an annual Christmas donation. Building trust means integrating commit-ment to the cause on a sustainable, ongoing basis as a relevant rein-forcement of the Brand Promise. People want assurances that your motivation is authentic. This means that the cause to which you com-mit your brand should be tied closely with your brand. People can tell if your attachment to a cause is opportunistic. It is easier and faster than ever to call out a brand if its motivations seem less than altruistic.

Market leaders have a special responsibility and a special oppor-tunity. Leaders like Starbucks, GE, GM, Airbus, BMW, and McDon-ald’s cannot solve a social problem alone. (The recent Starbucks “conversation” about the state of racial relationships in the United States is an example.) But as a market leader, the influence of leaders is greater than their market share. Market leaders should commit to using their size and strength to set powerful examples for others to follow. If leaders do not lead, then others will attack them for failing in their responsibilities.

After Howard Schultz put a halt to the Starbucks racial relations campaign, The Miami Herald gathered the opinions of south Florida business people. Most of those interviewed expressed positive feel-ings, although they did see it as a much bigger issue than any barista should be asked to handle. They were complimentary because Schultz

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started a conversation for the better good. “I believe everyone can and should play a role in raising awareness and helping to solve civic and social issues. ‘Everyone’ includes individuals and schools; faith-based, civic and social organizations; government (local, state and fed-eral); nonprofit organizations; foundations; and companies. The roles companies can play [are] to 1) use their platform to raise awareness about the issue; 2) use their talent to help identify the solution; and 3) engage their circle of influence to help provide resources,” PacoVelez, CEO, Feeding South Florida. 12

Ray Kroc believed that doing the right thing is the right thing to do. He taught that good citizens give back to the community. He had passion about being a responsible global citizen, a good neigh-bor, and a responsible leader. This is why McDonald’s has a heritage of local community involvement. Ray Kroc insisted that giving back to and becoming a part of the local neighborhood surrounding the restaurant was essential. “We should cooperate with the civic group and the community group in whatever is going on. If they need a new playground, if they need new playground equipment, we should do what we can to cooperate with them. We want their business. And, it’s not enough to just want their business to have them come over to our place and leave the money there. We’ve got to do something about making them feel friendlier towards us. And...wanting to come to our place because we are cognizant of the community and we show a spirit of cooperation. We have an obligation to give back to the com-munity that gives so much to us.” 13

Trust is a commitment a brand makes to its customers and to its employees, locally and globally. Although trust building (and rebuild-ing) is a major challenge for business, the rewards are well worth it. (At this writing, Volkswagen is facing a “trust” crisis as the United States and other countries seek to understand the depth to which VW approached exhaust emissions in its diesel vehicles. VW customers are hoping that the company will tell them how their tainted vehicles will be handled.)

At McDonald’s, we learned that a trustworthy relationship between our customers and our brand could be rebuilt. It takes time and effort; it takes commitment, but it pays. Research contin-ues to support this idea that a “relationship” goes beyond measuring

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just satisfaction. The data shows that a trusted relationship is worth more than mere satisfaction with a transaction. And brand trust has a strong, positive influence on things such as “brand loyalty, brand com-mitment, and purchase intention.” 14

Trust Capital

Building brand and corporate trust are increasingly relevant activ-ities for organizations globally. Muhtar Kent has to add rebuilding trust to his agenda because the recent “exercise-only” campaign has seemingly soured people’s perception of the brand. He has to deal not only with the FDA recommendations, but now with sugar limita-tions guidelines from WHO and The American Heart Association. 15 His mea culpa opinion page article in The Wall Street Journal was a good example of “seem to be specific but be vague.” He did not say anything compromising, but he did not say anything compelling. He ended his comments with, “we care.” We care about what? We care about whom? Statements like these do not build trust. And rebuild-ing trust is what Coke needs to do. Trust is a multiplier in the new value equation. If the brand experience is not trusted and there is zero trust, nothing else matters because zero times anything is zero. Trust generates value, and value drives organizational wealth.

The capital that drives organizational wealth comes in three forms: Financial Capital, Intellectual Capital, and Human Capital. There is an important fourth component of organizational wealth: Trust Capital. We define Trust Capital as the customer confidence in the authority, credibility, integrity, leadership, and responsibility of an organization to deliver promises of value to stakeholders. Trust Capital creates value for the organization. It is what an organization can draw from during troubling times or crises. In a world of dimin-ishing institutional trust, Trust Capital is by far the most important piece of organizational wealth for twenty-first century organizations. Creating Trust Capital allows a company or a brand to generate a trust reserve that helps through crises of brand or corporate character. A trust reserve of Trust Capital builds strong relationships over time.

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Endnotes 1. Schumpeter, “It’s the Real Thing: “Authenticity” Is Being Peddled

as a Cure for Drooping Brands,” The Economist , November 14,2015.

2. Rotter, J. B., “Generalized Expectancies for Interpersonal Trust,” American Psychology , Vol. 26, 1971, pp. 443–452.

3. Doyle, Simon, “Issue of Trust Hounds Canada’s Prime Minister,” Financial Times , August 20, 2015.

4. Kroc, Ray, 1968 Toronto Leadership Video.

5. Goel, Vindu, “At Twitter, Slow Growth in New Users Disappoints,” The New York Times , July 29, 2015. And, Koh, Yoree, “Twitter AdWoes Subside, but Growth Stalls,” The Wall Street Journal , July 29,2015.

6. Tesseras, Lucy, “Nowhere to Hide: Why Transparency Is a BusinessNecessity,” Marketing Week , July 1, 2015.

7. Edelman 2015 Trust Barometer , Annual Global Study, Edelman,2015.

8. Ibid., Edelman 2015 Trust Barometer , Edelman, 2015.

9. Rabin, Roni Caryn, “F.D.A. Seeks to Slow the Pour of Sugar,” TheNew York Times , November 10, 2015.

10. O’Connor, Anahad, “Coca-Cola Funds Scientists Who Shift Blamefor Obesity Away from Bad Diets,” The New York Times , August 9,2015.

11. Kent, Muhtar, “Coca-Cola: We’ll Do Better,” The Wall StreetJournal , August 20, 2015.

12. Odenwald, Thomas, and Christian Berg, “A New Perspective onEnterprise Resource Management,” MIT Sloan ManagementReview, Fall 2014, Vol. 56. No. 1.

13. The Miami Herald , “Business Can Be a Force in Advancing Civic,Social Issues; CEO Roundtable,” May 3, 2015.

14. Kroc, Ray, Phil Donahue Show , 1977.

15. Koschate-Fischer, Nicole and Suzanne Gartner, “Brand Trust: ScaleDevelopment and Optimization,” Schmalenbach Business Review:ZFBF , April 2015, Vol. 67, No. 2, p. 171.

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173

19 Rule 6: Realize Global Alignment

“None of us are as good as all of us.” 1

Ray Kroc’s belief was that working together works best. It was a principle that drove him every day. Everyone should work first and foremost for the system, of which we are all a part. And, by working together to make the system prosper, each individual would be work-ing for his own personal success. He told the owner-operators, “You are in business for yourself, but not by yourself.” 2 For Ray Kroc, for McDonald’s, and for any organization working for the greatness of their brand(s), alignment is everything. Alignment means we are working together toward the same destination. We all have the same Brand Purpose and Promise as our goals. We have the same view as to where the brand is headed. We have the same common definition of brand priorities. We have the same common metrics. The Plan to Win is an important tool in helping to assure global alignment.

The Rules-based practices for Realizing Global Alignment follow:

• Freedom Within a Framework

• Plan to Win: The Eight Ps

• The Collaborative Three-Box Model

Freedom Within a Framework

Being aligned focuses the creative process. It does not mean being an automaton, nor does it limit creativity. Webster defines align as coming together in agreement and alliance. It means giving

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appropriate support. Although it comes from the Old French words “to get in a straight line,” when we define alignment, we mean staying within the lines: being free to be creative without changing the brand and its policies. It means staying within the Brand Framework, the brand’s non-negotiables.

A global brand revitalization initiative needs to assure everyone that just because there is commitment to common focus and organi-zational alignment, sharing a common Plan to Win does not mean an end to creative thinking. In fact, our thinking is quite the opposite. Alignment should encourage creative liberty. But there must be some laws guiding the creativity.

Our view is that global marketing is not about global market-ing standardization. It is about global marketing harmonization. Our policy of “Freedom Within a Framework” liberates us to be relevant to local market conditions while assuring that we communicate with local brand voices that communicate and resonate in powerful brand harmony worldwide.

But Freedom Within a Framework goes beyond marketing, just as the Plan to Win goes beyond marketing. It affects everything. Freedom Within a Framework means that you create some bound-aries. People are encouraged to have freedom to be creative within defined boundaries. But they are not allowed to go out and shift the boundaries anymore than you are allowed to go out and shift the border between New York and Pennsylvania, or between Germany and France. Within the defined brand boundaries, you have a lot of leeway.

The Five Action Ps in the Plan to Win are the actions we must take to accomplish the mission that is articulated in our Brand Pur-pose and to bring our brand to life as defined in the Brand Prom-ise. In other words, the Five Brand Actions define the boundaries within which local markets are encouraged to be creative. Within the defined boundary lines we encourage creative, freethinking thought and expression, or “Freedom Within a Framework.” By knowing the brand’s organization and the stretch limits, by knowing the product capabilities, whether manufacturing or distribution, you will be able to define those specific priority actions necessary for delivering the promise and achieving the mission.

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CHAPTER 19 • RULE 6: REALIZE GLOBAL ALIGNMENT 175

Focus

Global alignment requires focus. This is easier said than done. If you are a huge brand marketed in more than 100 countries with 60 million customers per day, focus is not easy to achieve. A lot of people think that focus is limiting. Freedom Within a Framework tends to be criticized for providing boundaries that some describe as limiting. But focus is not limiting; it is strengthening. Some find focus to be frightening. They wonder how they can make their brand great if they can only focus on a particular audience with a particular need on a particular occasion. They do not want to miss out on anything. They want their brand to appeal to all people and any need and any occa-sion. Lack of focus weakens brands. Organizational focus and align-ment are fundamental to marketing a powerful brand.

The Plan to Win: Eight Ps

The purpose of the Plan to Win is to achieve organizational align-ment. The Plan to Win tackles the organizational, brand, and senior management desire for everyone being on the same page. The phrase “on the same page” seems to be the Holy Grail for marketers, man-agers, and executive teams regardless of type of business. Yet rarely do organizations create that “one page” of purpose, actions, and met-rics to which all can adhere. A Plan to Win does just that: it puts the Purpose, the Promise, the actions, and the performance metrics on a single page so that everyone can be on the same page.

For successful brand revitalization and for brand growth, the brand’s culture must change from playing to not lose to committing to a roadmap that defines how to win. The Plan to Win ensures the integration of brand actions for success across the Eight Ps: Purpose, Promise, People, Product, Place, Price, Promotion, and Performance.

Employees need a sense of purpose; they want to know that their work makes a difference. This is part of internal marketing: give peo-ple the definition of Purpose. What is the shared sense of purpose, the common direction that will align everyone? During brand revital-ization, a brand needs to refocus the organization around a common sense of purpose.

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It is important to remember two things:

1. A Plan to Win is dynamic. It needs to be refreshed as theworld changes. Not evolving the Plan to Win can leave a brandanchored in the past and static in the face of competition.

2. A Plan to Win for brand revitalization (turnaround strategy) isdifferent from a Plan to Win for growing (growth strategy).

The McDonald’s senior leadership continued to reference the power of the Plan to Win during CEO Jim Skinner’s tenure. Press articles would invariably mention how it was because of the Plan to Win that the brand was having such continuous positive earnings. However, the Plan to Win did not evolve with the brand’s success or with its relation to the competitive environment. The leadership did not create a growth strategy Plan to Win.

The Plan to Win is the glue that keeps everything together. With-out a cohesive Plan to Win, actions seem to be purposeless, haphaz-ard, and illogical. Actions appear to be thrown against the wall, waiting to see what will work.

The Plan to Win begins with defining the Brand Purpose and Promise. This means answering these questions: 1) what are we trying to achieve, and 2) what is the promised experience for our customers?

For the sake of understanding how to achieve alignment, here is a recap of the Eight Ps of the Plan to Win.

Recap: Plan to Win

Brand Purpose is the first P in our Plan to Win. A Brand Purpose is the compelling statement of the overarching brand intent or mis-sion. It must define a clear sense of direction, an overarching goal for the organization and the brand. It is the common goal for all the actions on behalf of our brand. It is the brand destination defining the Brand’s True North. Organizational alignment is critical. The entire organization must be aligned behind a single, clear, shared goal for each of the brands.

Brand Promise is the second P in the Plan to Win. The Brand Promise is the contract a brand makes with its customers. The Brand

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Promise summarizes the special bond between the customer and the brand. It expresses the promise that if you buy our brand, you will get this distinctive brand experience. It summarizes the brand’s focus, directing how we will develop the connection between the brand and our customers. By consistently living up to a Brand Promise, we can ensure that our brands will be relevant, distinctive, powerful, and great.

Once Purpose and Promise are defined, what are the actions we will take to deliver the Brand Promise to achieve the Brand Purpose? Effectiveness of a Brand Purpose and Promise are not determined by good intentions. Effectiveness is achieved by the actions we take. This brings us to the Five Action Ps: People, Products, Place, Price, and Promotion. The Five Action Ps define how we will deliver our Brand Promise to yield more customers, more often, more brand loyal, more profit. These represent our action priorities for bringing the Brand Promise to life. Brand revitalization means reinvention across all Five Action Ps.

The Action Ps follow:

• People— Employees are the most important assets of any busi-ness. They are the frontline when it comes to customer rela-tionships, especially in a service business. Internal brand prideis a critical success factor affecting external brand attitudes. Ifwe want employees to have passion and pride in our deliveringa superior brand experience, we have to show them we havepassion and pride in what they do and who they are. We have tosupport our employees with adequate resources and training.Talent management and development are a first priority.

• Product (and Service)— This is the tangible evidence of thetruth of the Brand Promise. A brand needs to be relevantlydifferentiated, delivering superior customer-perceived value.Continuous renovation and innovation are imperative for suc-cess. Product and service renovation and innovation are keys tosustainable profitable growth.

• Place— This refers to any location where the customer inter-acts with the brand. It can be a physical location (a restaurant,for example) as well as a virtual one on any device possible (a

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website, for example). Wherever and whatever it is, place is the face of the brand.

• Price— This is an important part of the customer’s value equa-tion. It is in the denominator of the Trustworthy Brand Valueequation because it is one of the customer’s costs. Price is notvalue. It is a component of the value equation. Value is deter-mined by the total branded experience a customer expects(functional, emotional, and social benefits) multiplied by trustfor the costs spent (in terms of time, money [price], and effort).

• Promotion— This is about creating an integrated approach toraising awareness, familiarity, and preference of the brand. Pro-motion includes every communication on behalf of the brand.

A Plan to Win sets a high bar for the brand. It reflects the vision and forward nature that is necessary for proper, disciplined strategic thinking. It provides planning boundaries and sets up a future focus.

We explained the value of creating a results culture in Chapter 17 , “Rule 4: Reinforce a Results Culture”: creating a culture that is evalu-ated based on producing measurable results. We reviewed the impera-tive of defining measurable milestones and rewarding people based on business and brand performance. The Performance P means design-ing and implementing a global system-wide measurement program. It must have annual milestones spanning three years that monitor prog-ress. These are the metrics that will be used to evaluate the progress toward the achievement of the Brand Purpose and Brand Promise through implementation of the activities of the Five Action Ps.

Think of the Plan to Win as a brand roadmap in which all business units are aligned around the same goals, actions, and measures. This is a huge task. The leaders must be visibly and verbally supportive. Anything that affects how people are evaluated and compensated is a volatile issue. Top management must be the leaders of the inspiration that will affect behaviors. Getting the Plan to Win into the organiza-tion is top down.

Here is a summary of the benefits of galvanizing the organization behind a common Plan to Win. We have updated this information since it was originally published.

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• A Plan to Win is a common platform for rebuilding TrustworthyBrand Value. It provides the necessary framework for success.A Plan to Win creates the platform for renewal.

• A Plan to Win outlines the critical brand components from Pur-pose and Promise through the Five Action areas to the Per-formance measurements of progress. Inconsistent business andbrand building create internal global chaos.

• People should have the freedom to do what is best locally withinthe global framework. The Plan to Win states what the actionsare, but it does not say how those actions are realized in eachgeography. There is freedom to do what is best by locale. How-ever, the metrics are global.

• A Plan to Win creates a common clarity encouraging everyoneto aim in the same direction by having the same brand goalsand priorities. You cannot be successful if you are unfocused.Focus is fundamental. However, different geographies may bein different places on the road to the common goal. Some geog-raphies may be closer to the end goal than others. Again, Free-dom Within a Framework applies.

• A Plan to Win helps an organization act as an integrated globalteam breaking down functional and geographic silos. Isolation-ism is limiting; it stifles creative thinking by limiting Return OnGlobal Learning (ROGL).

• A Plan to Win is dynamic. It has clear three-year goals. How-ever, if there is a significant change in the marketplace or thereis a new element that must be added to metrics, it is not sacri-lege to edit or add.

In 2006, Wendy’s, under interim CEO and President Kerri Anderson, announced its version of a Plan to Win called “Wendy’s Recipe for Success.” To drive superior restaurant-level performance, the brand said it would focus on the core elements that have made the Wendy’s brand synonymous with quality and freshness. As Ms. Anderson said, the team knows that Wendy’s resonates with current consumer tastes, so Wendy’s will focus on product innovation, tar-geted marketing, and operations excellence.

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Here are just some of the Wendy’s Plan to Win components. 3 We provide this list as an example of the disciplined thinking around brand that must occur to create a proper Plan to Win. Wendy’s has had a remarkable several years under the tenure of CEO Emil Bro-lick and now appears to be into a growth strategy plan rather than a turnaround plan. The following is public knowledge from a Fair Disclosure report.

• “The Company has re-established its brand essence, ‘QualityMade Fresh,’ centered on Wendy’s core strength, its ham-burger business.

• “Wendy’s plan to revitalize its brand includes: Emphasizing itskey competitive advantages—higher quality, great taste, andfresh ground beef; Capitalizing on the overall trend in indul-gent (large, juicy and multiple-flavor) sandwiches; and Con-tinuing to revitalize its new product pipeline.

• “Wendy’s has created a new Restaurant Services group toimprove system-wide operations processes and standards.Reporting to Chief Operations Officer Dave Near, this groupis headed by Executive Vice President Ed Choe, a 25-yearWendy’s veteran who has managed some of the highest-volumerestaurants in the system. Choe has formed a new operationsfunction known as Inspection Services that consists of 31 expe-rienced QSC (Quality Service and Cleanliness) Managers, whowill implement a formalized process for more thorough restau-rant and food safety evaluations.

• “The Company plans to continue its recent success with newproducts that reinforce its ‘Quality Made Fresh’ brand essenceand drive new consumers to its restaurants. The Company willintroduce in the fourth quarter new double-melt hamburgers,consisting of two fresh beef patties layered with cheese, freshtoppings and other flavors. Wendy’s is also testing many sand-wiches, beverages, snacks and breakfast items.

• “The Company plans to continue to improve the health of itsfranchisees and the Wendy’s system.

• “The Company will invest approximately $60 million per yearover the next five years into the upgrade and renovation of itscompany-operated restaurants.

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• “The Company will allocate a total of $100 million over the nextfive years to buy restaurants from franchisees, renovate and sellthem to proven operators.

• “The Company will provide approximately $25 million per yearof incentives to franchisees for reinvestments in their restau-rants over the next five years. Wendy’s also plans to sell 400 to500 of its company-operated restaurants to franchisees over thenext three years, with a goal of operating 1,000 total Companyrestaurants.

• “Wendy’s will seek to drive growth beyond its existing business.The Company is testing breakfast in 120 U.S. restaurants, andearly results are promising. The Company plans to double thesize of the test in the next three months, and is following a dis-ciplined process for product development and operations, aswell as analyzing consumer feedback. With the QSR breakfastmarket estimated at $30 billion, the breakfast test is a high pri-ority for the Company that could generate significant sales andprofits.

• “The Company believes it has considerable opportunity toexpand in the U.S. over the long-term and is making infrastruc-ture investments to grow its International business. The Com-pany will continue to moderate its short-term North Americandevelopment until restaurant revenues and operating cashflows improve.

• “The Company is redesigning its incentive compensation plan to drive future performance. The Company will reward employeeperformance based on net income and return on invested capi-tal improvements.

• “The Company will remain focused on maintaining its strongcorporate culture based on the values established by Wendy’sfounder Dave Thomas.”

Implications of a Plan to Win

Enduring profitable growth is the fundamental goal of business. Becoming profitable by reducing costs and eliminating waste is impor-tant, but it is not a sustainable business growth strategy. It is a cliché,

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but it is true: you cannot cost-manage your way to future growth. As we explained in Part I, “The Twelve Tendencies for Trouble,” cost cutting is not really a strategy for enduring prosperity. It is a strategy for profitable management of inevitable decline. We cannot have sus-tainable growth of the bottom line unless we create quality growth of the top line. To have quality revenue growth, we must profitably create more customers, convince them to come more often, and per-suade them to be more brand loyal. The only way to endure profitable growth is by achieving a sustainable brand advantage that profitably increases customer-perceived value.

The Collaborative Three-Box Model

What is the best structure for leading a brand in today’s world? What is the best organization for managing global brands in a locally relevant and in a personally unique manner? The way organizations manage global brands in an increasingly local and personal world is a current C-suite topic. For an increasing number of situations, matrix management is a global marketing fact of life. Is the responsibility for results global or local? And how does personal fit in?

We see the power of globalization. It has its positives (global reliability, safety, consistency), and its negatives (homogenization, standardization). Localization is as important; it is a marketing tsu-nami that is transforming the way we think about and manage global brands. Along with globalization and localization, there is the force of personalization. For most brands, the idea of global standardization—imposing global thinking on local markets—will not work. Excessive global standardization will lead to the demise of excessively central-ized brand management. Regions must have responsibility for being regional thought leaders, not just mere implementers of the ideas of remote, central big thinkers. How does a global brand deliver per-sonal uniqueness to each customer? The colliding forces of increased globalization, localization, and personalization present a challenge for global brands and the organizations that own them: how to man-age brands in the midst of the three simultaneous forces of global-ization, localization, and personalization. With the amazing surge in

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technology, consumers appreciate 1) the efficiency and familiarity benefits of globalization, 2) brands that reflect and respect local dif-ferences, and 3) the personalization of products and services.

As we described in New Brand Leadership , when it comes to leading global brands, the new imperative will shift from a two-stage model of “global handing-off to local” to a three-stage shared respon-sibility model. Our belief is that the Collaborative Three-Box Model is the best approach for today’s global marketing.

Global brands have a harder job today. They need to win across needs and forces that conflict and confuse. Global brand management needs a new approach for “managing to win” across geography and time. The old-think global brand marketing approaches (global stan-dardization and the hand-off) must be replaced by a twenty-first cen-tury mind-set and discipline that reflect these current issues. Instead of the current “hand-off” model, we need a global brand management model of shared responsibility. We need to move to a new Collabora-tive Three-Box Model. The Collaborative Three-Box Model reflects the principle of shared responsibilities.

The Model is what we call a shared responsibility model. It re-quires brand personnel to coordinate, cooperate, and collaborate. It requires changing their responsibilities and accountabilities and changing the way we think and work together to achieve our common brand-business ambitions. Collaboration is so much more effective than confrontation. It is also much more effective than the isolation of the silo mentality: the “let me do my thing my way” approach.

There are advantages to global marketing, just as there are advan-tages to localized marketing and personalized marketing. However, bland, undifferentiated, centralized-only thinking of the marketing landscape destroys these advantages. Viewing the world as monolithic is myopic. Globalization now shares the stage with localization and personalization. Finding the best way in which to manage the matrix while building and nurturing brands across geographies and functions is a key factor in twenty-first century business success.

The Collaborative Three-Box Model has three phases, which we define at great length in New Brand Leadership :

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1. Create the brand vision.

2. Define the global brand Plan to Win.

3. Bring the brand to life.

The Collaborative Three-Box Model is a new marketing approach, discipline, and mind-set. How you manage your brand is how you manage your business. The Collaborative Three-Box Model is the best new way for aligning brand and business in a time of globaliza-tion, localization, and personalization. It requires clear job descrip-tions that may have new areas of responsibilities. Some people will not be happy. Some will fight the alterations to their self-perceived status. But this approach allows true leaders to step forward. It ensures that the brand operates according to leadership marketing and operational excellence with financial discipline. It balances the short-term versus long-term antagonisms. The Model is a powerful force against those who care only about “in the year, for the year” and shun the need for true brand-driven, customer-focused strategies and actions.

The Six Rules are as important today as they were when we intro-duced them at McDonald’s in 2002. The Rules provide a disciplined framework for thought and action on behalf of the brand. It is insur-ance that the teams will do the right things in the right way for the right reasons with the right people. However, business exigencies can get in the way. Rather than be tempted by the Twelve Tendencies for Trouble, there are ways to stay out of trouble, as we discuss next. The following part explains how to keep your brand growing in a prof-itable, sustainable manner while maintaining the mastery of the Six Rules.

Endnotes 1. Kroc, Ray, Corporate Motto , 1979.

2. Kroc, Ray, with Robert Anderson, Grinding It Out , St. Martin’sPaperbacks, 1987, p. 110.

3. Business Wire , “Momentum of Wendy’s Brand TurnaroundContinues to Accelerate as Enhancements in Menu Managementand Product Innovation Generate Significantly Improved Sales andMargins,” October 12, 2006.

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Part III The Twelve Truths for Staying Out of Trouble

It is tempting and easy to slide from great brand to good brand. Staying on top means having constant vigilance, flexibility, insight with forceful yet relevant strategies, and an aligned organization of advocates. It means increasing a brand’s Trustworthy Brand Value so it continues to accrue Trust Capital. It means balancing the short term and the long term. It means having, and sticking with, the rigor of financial discipline, operational excellence, and leadership market-ing. And it means fighting the Tendencies for Trouble that can pick up your brand and slide it into a downward spiral.

It is impossible to control external forces. Markets climb and fall. Geopolitical powers shift, decline, and grow. Technology is proving to move faster than we imagined. Climate changes. The tools and strate-gies for the way people manage their lives evolve, as do the ways in which they relate to each other. But a brand can be disciplined inter-nally. And a brand can have the processes and people in place to face the cycles, roller coasters, and plateaus.

The Six Rules discussed in Part II, “The Six Rules for Brand Revi-talization Revisited,” provide the necessary regulations. But there are some important institutionalizations that brands can implement for bulwarks against brand decline.

We call these the Twelve Truths for Staying Out of Trouble:

1. Recognize that culture matters: overcome cultural resistance.

2. Institutionalize change.

3. Define a clear strategy for enduring profitable growth.

4. Break down silos.

5. Reinforce authenticity.

6. Make demographics matter.

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7. Act like a leader.

8. Stay relevant.

9. Move from living off current positive momentum to creatingongoing positive momentum.

10. Institute clear accountability.

11. Change the reward system.

12. Measure results.

The Twelve Troubles described in Part I, “The Twelve Tenden-cies for Trouble,” are practices that businesses should stop doing now. The Twelve Truths discussed in Part III, “The Twelve Truths for Staying Out of Trouble,” describe practices that businesses must do now. These are more than “nice ideas”—they are basic brand-business building blocks for enduring profitable growth. These Truths are not easy to implement. Anytime there are actions relating to cul-tural and organizational change, there will be pushback.

Keep in mind that brands do not naturally die. They can languish. They can be milked. They can be damaged. They can live second lives. They can thrive. They can live forever if managed properly. But lead-ers must see brands as more than a line on a balance sheet, more than an identity for marketing efforts. There are brands like Clark’s shoes, Stella Artois, Cadbury, Royal Delft, Caswell Massey, Jim Beam, Cam-bridge University Press, Kikkoman, Fiskars, Gaggenau, and Coca-Cola, to name a few, that have been around for more than 100 years and continue to stay relevant. These brands have found ways to evolve as the world changes. A Finnish manufacturer of blades, candlesticks, and pig iron founded in the mid-17 th Century, Fiskars now has some of the most desired gardening implements and cooking tools, includ-ing not only scissors and knives but also pans. Husqvarna, the Swedish professional and consumer outdoor powered products company, has also been around since the 17th Century. Utility companies use their chainsaws for clearing downed trees, and consumers use their snow blowers for their driveways.

Creating a brand-business focus within an organization, across geographies and functions, is hard work. But the rewards are enormous.

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187

20 Truth 1: Recognize That Culture

Matters: Overcome Cultural Resistance

When we speak about culture change, we refer to creating a brand-business-driven mind-set and management approach throughout the entire organization. Many companies say they focus on building great brands. Yet their metrics say otherwise. For example, one global firm adamantly states the primacy of building preferred brands, yet it does not have a brand preference metric in its business scorecard. Another company allocated years trying to galvanize around the corporate global brand name, yet several geographies would not even have it in their respective scorecards or abide by any metric that measured that brand.

Culture matters. Re-org charts and consultant matrices and flow charts for strategy management rule many businesses. Organizational change and process management can lull organizations into a culture coma. If you have a rigid, closed, manufacturing mentality in which rulebooks govern every action, then you have Campbell Soup before Douglas Conant. If you have a culture of mediocrity and a sense of failure from multiple bankruptcies, then you have Continental Air-lines before Gordon Bethune. If you wonder how McDonald’s could be in trouble in 2014, look to 2006–2012 and the culture of compla-cency and cultural arrogance with a side order of risk aversion. (See the online McDonald’s case history at www.ftpress.com/sixrules .)

Culture change does not need to involve a massive redo. All cul-tures have elements that must endure. Corporate cultures have ways of doing things that have been good at brand and business building. But culture change needs leadership. We define leadership as these five behaviors:


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1. Inspiration: Defining a motivating vision and goals— What is the organizational ambition? Why should we care?Never underestimate the power of inspiration. Of course,employees are energized by profitability and recognition fortheir role in making money. One leader we recently workedwith thought inspiring people to feel good was a waste of time.He said publicly that people would feel inspired by increasingsales and profit. The company released a corporate-wide videoon the new strategy. It was a video of human automatons thatlacked all emotion for the brand and excitement for the busi-ness. The commitment of the organization reached a recordlow.

2. Education: Clarifying why this new vision is important— What will we have to do differently to succeed? How will wedo it? Education is an ongoing experience. It is not a class thatemployees take so they can check it off the HR course list.Education bridges geography and job function. It provides acommon platform for moving ahead. For example, at McDon-ald’s as part of the 2002–2005 turnaround, to help employeesunderstand all the brand changes, an online branding courseopen to all was created in multiple languages. At HamburgerUniversity, brand concepts were introduced into the openingcourse for new store managers. The introductory course wasupdated to show how the original concepts were relevant andconnected to the modern, contemporary brand changes. Inter-nal and external marketing people from around the world spentseveral days learning about the new Brand Essence, ForeverYoung, and the new campaign, “i’m lovin’ it.” Education lasts.And in a corporate environment where people enter from dif-ferent brands and companies, it is essential they all learn whatyour brand and company is about. However, learning must stayfresh and move forward. We worked with a client that said peo-ple would believe in brand if only they were more educated.Then the client proceeded for nine years with the same edu-cational product. People turned off and tuned out. Educationshould be a build, not a bore.

3. Influence— This means impacting the work of others throughguidance, experience, and expertise rather than relying only on

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CHAPTER 20 • TRUTH 1: RECOGNIZE THAT CULTURE MATTERS:

OVERCOME CULTURAL RESISTANCE 189

direct command and control. The leader must be a collabora-tive authority bringing people together (unifying the teams) for productive action on behalf of the brand. The power of influ-ence is beautiful to watch. One client wanted to institutionalize a new common global brand scorecard in 100 countries. The pushback was severe. A quiet but determined Italian researcher took it upon himself to generate buy-in for the new measure-ment tool. It took him more than 6 months. He traveled to all 100 countries in which the brands did business. He made the case for the change. He helped create a set of training materials. There were always those who would not be team players, but the scorecard was adopted. In contrast, when the new global chief marketing officer (CMO) of a service business decided that he did not appreciate the efforts of the regional teams, he sent his global brand leaders into each country with orders to “tell them what to do now.” When the regions are told what to do, they will do it, but they will not take responsibility for results. By the end of his tenure, the regions were so isolated and disgusted with the central global team that actions were at a standstill. The brands had lost their way. In the Scholasticism of European Universities of the Middle Ages, influence meant the flowing of some ephemeral matter, or “imperceptible or indirect action exerted to cause changes.” 1 Think of influence as corporate and brand diplomacy. You cannot hold it in your hand, but it has tremendous force.

4. Support— This involves not just hoping that people will per-form differently, but providing the necessary training andtools. We provide tangible and emotional encouragement andreinforcement to help people resist the cultural tendencies toreturn to old habits. Some companies are more prone to inter-nal support than others. This is not a result of size but a result ofcultural leanings. In 1989, one company in the food and confec-tionary business decided to educate its employees about nutri-tion. The company saw that there was a dark cloud of growingpublic concern (well ahead of the current issues that are chal-lenging food companies today) about the nutritional contentof foods, including colors, ingredients processing, snack foods,and beverages. Academics in biochemistry, sports nutrition,

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dental health, and dietary habits were culled for their own ideas and teachings. Not only were in-house nutritional books and dictionaries created, but a traveling, global three-day seminar took place touching all countries in which they did business. Each office around the world had “floor experts” who were there to answer any questions, whether business or personal, about nutrition.

5. Evaluation: Providing regular progress reports based onrelevant metrics— We also mean recognizing and rewardingpeople who produce the right results the right way. Be sureto align rewards with the defined strategic outcomes. Peoplewant to know how they are doing. And they want to know howto improve. Use constructive criticism: “Tell me what I shouldstop doing. Tell me what and how to improve effectiveness.”Evaluation should be about more than metrics. It should alsobe about reward and recognition. There should be some per-sonalized approach for delivering the results, keeping moralehigh, and building pride. Remember, the People P is the firstAction P for a reason.

If your culture is getting in the way of creating a brand-business culture, face the facts. Building a brand-business-driven culture aimed at enduring profitable growth is a process combining action and learning.

Endnote 1. Webster, Apple Mac Air dictionary.

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21 Truth #2: Institutionalize Change

Change happens all the time. Today it is almost impossible to keep aware of everything that changes around your brand. The digi-tal advertising business has to deal with technologies, devices, and apps that change so much faster than people adopt and adapt. Change inside the company usually comes with a change initiative. A change initiative has a program, an HR course, a set of slides, a video, a script, an app, a dictionary, a metric (or series of metrics), and in many cases a slew of young, junior consultants who take up a lot of office space. We have worked with companies in which each time there is new leadership, there is a change initiative: new person, new ideas. If you happen to work in a place where the president or the functional chief changes at a rate of every two years, you can expect to have to change as well. This is not what we mean by institutionalizing change.

Brand teams need to be flexible. They need to be able to make changes when necessary. As we said in Part I, “The Twelve Tenden-cies for Trouble,” continuing to do the same old things when the world is different is a formula for failure. However, the biggest challenge is ensuring that the brand teams are open to change and the environ-ment is conducive to change, if and when it comes. In organizations where cultural change will take place or is taking place, “change was far from simple to implement successfully. In order that the change effected be genuine and not superficial, cultural change initiatives must be consistently reinforced, widely communicated, supported from the top of the organisation and realistic for the organisation’s circumstances at that time.” 1 As we said earlier, education is critical to reinforcing change and creating an atmosphere that is conducive to change.

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Cadillac’s leader believes leaving Detroit will spark a more flex-ible, change-oriented culture for the brand. It is not clear yet whether Cadillac’s move to New York City is working to help employees focus on rebuilding the brand to such luxury greatness that it can compete with Mercedes, Lexus, or BMW. But Johan de Nysschen, president, believes separating the brand team from Detroit is a way to inject change not only into the brand but also into its employees, and hope-fully into its customers. He wants a brand team that is open to the ideas he feels will lift the brand image to new great heights. Mr. de Nysschen’s move out of Detroit was a shock to the industry, to ana-lysts, and to insular GM. The reasons he gives are that New York is the global center for global ideas. Cadillac needs that kind of creative energy infusion. He says also that in Detroit there is a more provincial attitude that works against Cadillac. 2

Brands are dynamic; they are active promises about what they will do for the customer. Brands do not do well in closed, apathetic, and lethargic organizations. Why? Brands need continuous renewal. Brands do not naturally live and die by some brand life cycle. A brand can live forever, but only if it is properly managed. This means the team must be aware and alert to marketplace changes and antici-patory ideas for satisfying customer needs. Without the continuous renewal of innovation or renovation, the brand will stagnate. The business will stagnate. As pointed out in a recent article, “sustainable growth requires building a continuous renewal cycle.” 3

When there is a misalignment between the brand strategy and the brand culture, the culture prevails over the strategy. Culture always wins. That is okay only if the culture is an adaptive one. Brands need supportive, flexible cultures. If the culture is inactive and risk averse—in other words, closed to change, inflexible, and resistant to ideas—the misalignment is serious. 4 Here is an example.

There was a manufacturing company filled with engineers. The culture was risk averse, conservative, traditional, and proud. The cul-ture was inflexible and stubborn. The head of manufacturing once turned down a really good idea because it would mean changing something on his manufacturing line and having to retrain employees. A competitor came to market with a similar product and changed the marketplace. The company decided it needed to be more innovative.

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CHAPTER 21 • TRUTH #2: INSTITUTIONALIZE CHANGE 193

So the manufacturing company spent millions of dollars on a cre-ative consultancy to teach managers (most of whom had engineering degrees) around the world how to be more “creative.” Attendance was mandatory. Employees took all sorts of fun seminars and played games for more than a year. At the end of the contract, the consultants held a “creative day exercise” with all the managers involved. The managers were told they were now “creative thinkers.” The goal of the “creative day” was to highlight the newly acquired creative skills. The exercise was to create the most creative toaster possible. It was an embarrassing, defeating experience. The company went through all this “creativity engineering” without spending energy to actually change the cultural environment. What is the use of having creative ideas in a culture that resists creativity? No one was any more open to innovation than a year earlier. And now employees saw the futility of dashed hopes. The only good news for the assembled group was the speech by the new head of “cost cutting” (supply chain) when he informed the audience there were more than 200 different suppliers of a certain part. He would bring this number down to 2. He received a standing ovation. That was the big “creative” innovation that year.

Endnotes 1. de Chernatony, Leslie, and Susan Drury Cottam, “Interactions

Between Organisational Cultures and Corporate Brands,” Journal ofProduct & Brand Management , 2008, Vol. 17, No. 1, p. 13.

2. Ulrich, Lawrence, “Cadillac Has New Boss, New Address and BigPlans,” The New York Times , August 21, 2015.

3. Adolph, Gerald, and Kim David Greenwood, “Grow from YourStrengths: The Only Sustainable Way to Capture New OpportunitiesIs to Remain True to What Your Company Does Best, Strategy &Business , Autumn 2015, p. 38.

4. Ibid., de Chernatony, Leslie, and Susan Drury Cottam.

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195

22 Truth #3: Define a Clear Strategy for

Enduring Profitable Growth

How do we plan to get the brand to where we want it to be? This is the fundamental driver of the Plan to Win: what is our Plan to Win, and how will we generate enduring profitable growth? It has to bal-ance short term and long term. It has to be brand-business driven. And, as a strategy, it must not be a series of unconnected tactics. It is unfortunate, but when a brand is in trouble, the plan deteriorates to tactical actions with no clear strategy.

The brand strategy does not exist in a vacuum. It takes place within the purpose and ambition of the corporation. The corpora-tion’s purpose is the guiding force that provides the direction for all thought and action on behalf of a business. All corporations are in the business of building an enduring, profitable, growing, and preferred brand, whether it is the corporate brand (GE, for example) or the corporation’s branded portfolio (P&G: Tide, Crest, Swiffer, Febreze, and more). The corporation must decide if it wants to be a brand-led organization. This means that brand is at the center of every decision and action. It means that everyone from the CEO to the Board of Directors down throughout the enterprise believes that how we man-age our brands is how we manage our business. Brand strategies must fit and work within the stated corporate priorities.

One of the problems with brand strategy is that many who define it do so incorrectly. If you search on nexis.com, for example, articles on brand strategy focus primarily on such things as media, especially digital platforms, image, logo, and other tactical approaches. Brand strategy is much more than this. It is about defining the direction of the brand as well as the plan of action to make progress in that

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direction. In our Arcature approach to enduring profitable growth, the strategic development process is this:

1. Where are we now?

2. Where do we want to be?

3. How do we plan to get there?

4. How will we implement the plan?

5. How will we measure progress?

“Where are we now” defines the current state of the brand, the competition, and the world, including the current customer base. “Where do we want to be” is the articulation of the brand’s vision: what is the possible dream we want to achieve? Strategy is created in step 3: how do we plan to get there? This is not about advertising and messaging; it is the design of the Plan to Win. It is your strategy for making progress toward the brand’s vision. Media, logos, imag-ery, and such are part of step 4: how will we implement the plan? When people believe a brand’s strategy is about logos and media and messaging, marketing becomes a lower echelon job. To be a C-suite priority, brand strategy needs to be the plan for growing a powerful business.

Listening to or reading the comments of how the corpora-tion presents its priorities at analyst meetings is a good indicator of whether there is an actual strategy or just a list of tactical actions. For example, at an analyst meeting in early May 2015, McDonald’s revealed its turnaround priorities. They were about restructuring the organization and financial engineering through cost cutting, refran-chising 3,500 restaurants, and returning more than $8 billion to share-holders in 2015. There was no definition of the common, articulated purpose and promise. Who is the McDonald’s target audience? What are the relevant needs that McDonald’s will aim to satisfy? What is the customer-defined competitive set? How will McDonald’s become the best in class? What is the plan for generating Trustworthy Brand Value? How will the brand build Trust Capital?

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23 Truth #4: Break Down Silos

Organizational silos inhibit the brand’s ability to deliver integrated customer-perceived Trustworthy Brand Value leading to enduring profitable growth. Silos are a hindrance to brand growth and gov-ernance. Silos are insidious when it comes to brand and corporate collaboration. People can hide from taking responsibility when they work within the silos. Silos are bad for business and bad for brands. In a world where sharing and integration are powerful forces, the silo mentality creates segregation and selfishness.

It is possible to avoid the silo mentality, but it takes a strong desire among the company’s leadership to make this happen. There is a new book on silos that discusses how Facebook purposely organized and created an anti-silo mentality so it would not turn into Microsoft and Sony. In the excerpt published in Financial Times , the writer reviews the steps Facebook took to ensure that the stultifying effect of silos would not insinuate itself into the company as it grew. Facebook believed that because it was built on the idea of friendships, it would apply similar approaches to its personal interactions. The approaches Facebook took had two aims. First, how could it have specialized teams without running the risk of losing creativity and sharing? Sec-ond, how could it prevent the rigidity and inward-looking mind-sets that creep into teams when they are divided into sections? The book reviews what happened to Sun Microsystems, for example, when it subdivided and subdivided, creating isolation and stodginess. 1

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Endnote 1. Tett, Gillian, “Go Mingle, Have Fun: Big Businesses Often Split

into Compartments and Self-Contained Pockets of Knowledge, orSilos.” In this exclusive extract from her new book, The Silo Effect , Gillian Tett finds how bootcamps and 5am breakfasts keep Facebookconnected, Financial Times , August 22–23, 2015.

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24 Truth #5: Reinforce Authenticity

Authentic comes from the Greek word meaning of undisputed origin, or genuine. Unfortunately, as with so many other words, authentic has been watered down in the same way as natural . For example, natural is used to create a perception of “better for you” food. Yet a chemical can come from a “natural” source and still be bad for you. The natural ingredient carrageenan comes from seaweed. It is used in so-called “natural“—and in some organic—foods to keep ingredients from separating. The problem: research indicates that consumption can lead to chronic diseases such as inflammatory bowel disease, rheumatoid arthritis, and arteriosclerosis.

The definition of authenticity is particularly diffuse.

“Commonly, authenticity is used to refer to the genuineness, reality or truth of something. It has also been defined in terms of sincerity, innocence and originality and related to concepts such as being natural, honest, simple and unspun. Consum-ers experience authenticity differently and use a range of cues to evaluate the authenticity of an object, which may be based on their interest in, and knowledge of, a subject. The distinction between the authentic and inauthentic tends to be subjective and socially or personally constructed. It is a behavior experienced by an individual that is self authored and self-determined.” 1

In the Travel supplement of The New York Times , November 15, 2015, there was a thought piece on authenticity. The subtitle of the article was “Travel These Days Involves the Almost All-Consuming Search for the ‘Authentic.’ But in a Globalized Age—When a McAloo

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Tikki Is Just as Indian as the Taj Mahal—Has the Very Word Lost Its Meaning?” 2

Today, authenticity not only relates to real truth and genuineness, but also relates to transparency (especially in corporate social respon-sibility actions), craft-based, hand-made origins, and “of the earth,” such as the method of growing foods, the provenance of foods, and the degree of process or industrialization of foods. Traditions are authen-tic. But there is a fine line between being traditional and being out of date. Brands need to maximize the traditional while not being so far away from their roots that they lose authenticity. As The Economist pointed out in the Schumpeter column, those with “drooping” brands are misusing authenticity. Specifically, “Authenticity is being peddled as a cure for consumers’ ebbing loyalty to brands.” However, the good news is that people have access to information and are wary of mar-keting gimmicks, so they can sniff out pretense over real authenticity. The writer notes that if your product has “some real-world qualities,” authenticity is much easier to communicate. The example used is the American craft beer industry. “As drinkers turn against the pallid swill pumped out by mass-market brewers, the craft brewers have almost doubled their market share in the five years to 2014.” Beer drinkers see the local, hand-crated beer as more authentic. 3

An example of transparency, or the lack of it, is the new push for GMO labeling. The push for information and knowledge about GMO ingredients in foods and beverages has allowed some food suppliers to act in a rather inauthentic manner. In a recent report, it turns out that adding the words non-GMO to a label, even if it is not needed, is an effective way to increase sales and, interestingly, authenticity. The journalist mentions an organic lettuce grower who grows perfect-looking heads of organic lettuce. The lettuce looks so good, rumor was there had to be GMO meddling in his seeds. The grower obtained non-GMO status for two different types of his lettuce, and now the authenticity of the lettuce is no longer questioned. Another example is salt. A salt producer put a non-GMO label on the package, which infers that the salt has no genetically modified organisms. But salt has no genes, so the label is unnecessary. However, in today’s world, non-GMO is an authenticity deliverer. 4

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CHAPTER 24 • TRUTH #5: REINFORCE AUTHENTICITY 201

Authenticity is relative, however. Are the canals and plazas at The Venetian in Las Vegas authentic? Some believe so. For others, these are not even an authentic reproduction. How authentic is Colonial Williamsburg, Virginia? It is defined as a historic interpretation. Is this authentic? Hurricane Katrina devastated New Orleans. As the city continues to revitalize its neighborhoods (“urban regeneration”), it is learning how to balance its past while celebrating its future. Or, as Alice Lascelles says, “These days New Orleans is a city finding its identity in the present while protecting its past.” The city has a his-tory and it will be emboldened, but it will also be contemporary. Its authenticity will rest on how it is perceived relative to its present and future. 5

The online world has amplified the need for authenticity. Being real is essential because people can spot a fake pretty quickly, espe-cially Millennials and the next younger generation, post-Millennials or Gen(eration) Z. Social media is supposed to be about honesty and transparency. Authenticity aids relationships. 6 Brand Journalism is a way to emphasize authenticity through telling the brand’s story in real and honest ways. Telling the true and whole story behind the brand connects with people. And finding different ways to deliver the story to the brand’s multiple audiences makes the communications even more genuine.

Authenticity must guide the brand’s actions and its essence. There is no place to hide in the digital, information-laden world. Say-ing things and then not delivering is a bad mark against a brand’s authenticity. Coke is facing that situation right now as people ques-tion its motives in fighting obesity.

Leadership marketing means being careful with a brand’s heri-tage. It also means making sure there is no shading of the facts. Leadership marketing has a responsibility to a brand’s authenticity. Whether the brand has a history or is making history, authenticity has meaning in an environment where virtual relationships are the norm.

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Endnotes 1. Napoli, Julie, Sonia J. Dickinson, Michael B. Beverland, and Francis

Farrelly, “Measuring Consumer-Based Brand Authenticity,” Journalof Business Research , 67, 2014.

2. Iver, Pico, “Keeping It Real,” The New York Times , Travel supplement, November 15, 2015.

3. Schumpter, “It’s the Real Thing: Authenticity Is Being Peddled as aCure for Drooping Brands, The Economist , November 14, 2015.

4. Brat, Ilan, “Food Goes ‘GMO Free’ with Same Ingredients,” TheWall Street Journal , August 21, 2015.

5. Lascelles, Alice, “New Orleans Fizzes Again,” Financial Times , August 22–23, 2015.

6. Glendinning, Amy, “The Big Social Media Conference: TheImportance of Authenticity; Businesses Seeking EngagementThrough Twitter, Facebook and Other Platforms Were Advisedto ‘Keep It Real’—and Find the Stories Behind Their Brands,” manchestereveningnews.co.uk , July 10, 2015.

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25 Truth #6: Make Demographics Matter

Unless there is a catastrophe of global proportions, one thing we can be sure of in an uncertain world is that demographics will happen. For example, the data over the past couple of decades on family size and fertility is affecting not only mature economies but also emerging ones. The data on youth populations shows that more unemployed young people live in societies where there is already unrest, such as the Middle East and parts of Africa.

We live in a world that is getting older and younger at the same time; the Boomer generation has longevity, and the Millennial gen-eration is just as big. This current two-humped demographic reality pre sents opportunities for brands because the Boomers have discre-tionary income and the Millennials rule the social media environ-ment, changing the way we communicate and relate to one another. The power of these demographic developments has impacted the one-child policy in China. Just recently, the Chinese government abandoned the one-child rule because there are now many older peo-ple with no children to take care of them and a shortage of younger people to work in the businesses that fuel the economy.

Two massive age cohorts with different worldviews, different val-ues, and different complexities pose an interesting conundrum for brands: which of these age groups should be targeted? What will a brand need to do differently? This is an interesting challenge not just in terms of product and service, but also in terms of communications, including package design. For Boomers, products need to consider easy-to-open jars, door handles that do not need twisting, font sizes, lighting in restaurants, hotel showers and bathtubs, and valet parking. For Millennials, products need to consider provenance for foods, bev-erages, cosmetics; ratings and reviews by peers, not experts; noncash

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transactions regardless of amount; more technological services where humans only cause bottlenecks and wasted time; and 24/7 and mobile everything.

These demographic factors are currently having impact across all industries and within organizations. Just speak to the HR teams about the differences in needs and requirements for Boomers versus Millennials. Demographics affect brands and brand teams in many different ways. For example, a recent report indicates that one of the biggest problems Millennials face is the paucity of day care for their kids. For many Millennials, day care is not affordable. As we men-tioned, Millennials are not one single entity: the oldest were born in the early 1980s. They have or are having children. What they find is the lack of affordable childcare. The recession and its accompanying slow rise in wages have put older Millennials in a bind. The childcare industry did not grow because the fertility rate did not make childcare a reasonable category to be in. Also, the issues around how to behave around kids and insurance stymied the growth of responsible child-care. 1 If you think this only affects businesses and the “perks” they provide, think again. No childcare means parents have to figure out other arrangements. This can influence simple things such as eating out.

It used to be that the “demographics” section of a questionnaire was the neglected back page. It was information you needed to col-lect but often ignored. Now, with extraordinary tools for data mining and management, demographics provide the basis for new customer-driven insights. Data shows that the Millennials are really not just one group but at least two because the older members of the cohort are 30 or about to be while the younger members are just finishing col-lege. Marketing’s opportunities are maximized because a brand might consider strategizing against two different large cohorts—Boomers and Millennials—and against two Millennial cohorts.

In Chapter 12 , “Tendency 12: The Disregard for the Changing World,” we discussed Whole Foods’s decision to create a new brand for younger shoppers. The new, smaller-format, more affordable entry will be more hip and much cooler than Whole Foods as part of a strategy to appeal to younger, more cost-conscious people who do not frequent Whole Foods. The new stores will have more technology

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CHAPTER 25 • TRUTH #6: MAKE DEMOGRAPHICS MATTER 205

that will not only lower labor costs but appeal to the tech-savvy gener-ations that find Whole Foods too full of pricey options. John Mackey, founder and CEO, believes this evolution is “keeping up with times.” This new generation wants a more intimate experience similar to Trader Joe’s. 2 And, as Bloomberg Businessweek pointed out, the Mil-lennial generation grew up on organic foods, so it is really nothing special to them. They are not as “dazzled” by organic; there is no cachet. Millennials do demand transparency, however, which puts a burden on all suppliers who may need to change labels. 3 Their par-ents and possibly grandparents may have had to take empty jars to stores to buy organic peanut butter, for example, but Millennials have experience with all varieties of prepackaged, organic nut butters in beautifully designed jars.

In 2014, Campbell Soup woke up to the demographic changes that were affecting sales of soups. As CEO Denise Morrison stated, “...our industry is being profoundly affected by changing demo-graphics. Much has been said about the growing importance of Mil-lennial and Hispanic consumers in the US, and the rapidly evolving expectations of the large population of Baby Boomers. But...we are also seeing profound changes in the definition of the family and in house hold composition and dynamics: families today are increasingly non-traditional, multi-generational unmarried, single parent and multi-cultural. Fifty-five percent (55%) of American households now consist of adults only, with no children under their roofs. This is a stun-ning transformation with huge implications for the food business.” 4

Encore Capital Management, a Florida-based real estate entity, just announced a new resort development with an interesting idea. The new development will be on 340 acres near Disney World. The resort will cater to multigenerational travelers who yearn for “mean-ingful family experiences.” The homes will be designed to accommo-date extended families. Homes will have between 5 and 12 bedrooms. The idea of multigenerational travel is not wishful thinking. The auto-mobile group, AAA, conducted a study in May 2014, and the results support this idea. Thirty-six percent (36%) of those polled planned to take trips in the next 12 months with their children, parents, or grand-parents, which is a 4% increase over the previous year. The AARP conducted a similar survey that indicated 47% of those over 45 years old planned to take a multigenerational trip. 5

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Half of Germany’s population is over 45 years old. (Only Japan has an older population in the developed world.) Currently, 27% is over age 60. One in 20 people is 80 years old or older. The effect this is having on the workforce is huge. Who is going to work in the econ-omy that is seen as Europe’s powerhouse? The country is rethinking how to manage in a world of shrinking fertility. The industries need skilled younger workers, and these are hard to find. Some companies are leveraging the aging population. The clothing chain Adler adver-tises the availability of sizes for all bodies and shapes. The company understands that bodies may change shape as they age, but these bod-ies are still active and fashion conscious. 6

Endnotes 1. Roman, Erin, “Millennials’ Biggest Problem? Day Care,” Bloomberg

Businessweek , August 24–30, 2015.

2. Gasparro, Annie, and Jesse Newman, “Whole Foods: Now in TwoDifferent Flavors,” The Wall Street Journal , May 8, 2015; and,Gasparro, Annie, “Whole Foods Plans New Store Concept, The WallStreet Journal , May 7, 2015.

3. Giammona, Craig, “Whole Foods or Walmart?” BloombergBusinessweek , May 18–24, 2015.

4. FD (Fair Disclosure) Wire , Campbell Soup Company at CAGNYConference—Preliminary, February 19, 2014.

5. Friedman, Robyn A., “Project Plans to Span Clans,” The Wall StreetJournal , August 19, 2015.

6. Wagstyl, Stefan, “Germany’s Rapidly Ageing Population Is Making ItHarder for Companies to Find Enough Workers and Threatening ItsPosition as Europe’s Largest Economy. But Angela Merkel’s PoliciesAre Not Helping,” Financial Times , August 25, 2015.

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26 Truth #7: Act Like a Leader

There is an interesting conversation underway about leadership. What should a leader do first? Many business observers, writers, and academics believe the leader should spend time thinking about the kind of leadership she will bring to the organization. In this side of the debate, leaders should be more thoughtful before they jump into action; they should gather their thoughts and do some introspection. On the other side of the debate is Herminia Ibarra, a professor of leadership and learning at French business school Insead. Her side of the debate thinks new leaders should avoid long periods of introspec-tion about their management roles and instead act. Being a compe-tent leader will develop through actions, not the other way around. Leaders should act first because “the experience of leadership is what changes the way you think and who you become.”

Dr. Ibarra thinks leaders should not concern themselves with insight but should be more concerned about “outsight,” knowledge honed from experience and interaction on the job. We just discussed authenticity. Dr. Ibarra points out that we live in an age of “authentic leadership,” the concept that a leader should know who he or she truly is as a leader. However, she states that although this is nice to know, it should not be the starting point. Spending too much time on self-examination is not productive because this “anchors us in the past at a time when we need to sail in uncharted waters. Instead, having outsight helps to rid you of past sources of self-esteem, old goals and old habits and gives leaders new relevance and purpose,” says Dr. Ibarra. 1

Most of the successful turnarounds in which we have been involved have had leaders who spring into action without the intro-spection. When the house in on fire, it is not the time to consider why;

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the goal is to put the flames out. Once that is accomplished, there will be sufficient time to think about why you were the designated fire marshal and what it will take to rebuild. These leaders placed “arrogance” and “ego” aside as they put out the immediate fires that threatened the life of the company and its brands.

Brands need to act like leaders as well. Brand leadership runs on the same principles of transparency, integrity, honesty, credibil-ity, authority, responsibility, and authenticity. A 2005 statement on brands from Interbrand indicated that among 3,000 brands, leader-ship is the characteristic most closely correlated with the strongest long-term value. But being a leader brand has changed. Interbrand says that the playing field is now quite different from the past when size and strength were all that mattered. Today, leader brands have to follow a “newer, restless and agenda-setting leadership across all areas of philosophy and operations, inside and out. Leader brands also need to take it upon themselves to explain the wider benefits of brand-ing, and increasingly show sensitivity to local cultures, so that they continue to have license to operate (and hopefully be welcomed) in even the most difficult parts of the world. Brands can be uniting influ-ences, and powerful social and economic developers.” 2 Brand leader-ship means a brand must be a visible, authentic, and an authoritative symbol of an historic legacy, or a created one, and have a vision of its place in the future. Brand leadership comes from education, inspira-tion, influence, support, and evaluation.

Acting like a leader requires follow-through, but follow-through must adhere to new rules. It is not enough to “Do what you say you will do.” To be authentic, credible, and responsible, the brand must deliver its promise in the right way with the right people doing the right thing. This is especially necessary when it comes to social respon-sibility. In a world of instantly checkable claims, it makes no sense to say one thing to enhance the brand image and then not deliver. Right now, The Honest Company, Jessica Alba’s baby and child-friendly enterprise of pure home and baby products, is under pressure for its sunscreen lotions. Apparently, many users have complained that they or their families have experienced sunburns even though the labels on the products have high SPFs. The company is fighting the complaints by saying they comply with government standards. In con-trast, McDonald’s felt the government standards on toy safety were

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CHAPTER 26 • TRUTH #7: ACT LIKE A LEADER 209

not stringent enough, so it created rules that were significantly higher than the government’s.

In 2006, the president of Mattel (Neil Friedman) told the press that it was time (again) to fix Barbie’s image. Competitive dolls like Bratz were eating into the blonde beauty’s sales. He said, “Forget about what other people are doing and focus on continuing to be the leader. We are the leader. Act like it.” 3

Endnotes 1. Dillon, Frank, “Looking Forward and Learning by Doing

Beat Backward Introspection: Professor Herminia Ibarra ofInsead Believes Top Managers Develop in Their Job ThroughExperimentation,” The Irish Times , April 6, 2015.

2. Interbrand, “10 Branding Insights and Opportunities fromInterbrand,” Bizcommunity.com (South Africa: Marketing andMedia) , March 29, 2005.

3. Los Angeles Times , “Mattel President Plays with Barbie’s Image,”June 19, 2006.

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27 Truth #8: Stay Relevant

Never lose touch with the customer, the customer’s needs, their occasions, and their competitive sets. Never take your eye off the ways in which the world is changing. And be anticipatory and flexible. Use R&D to see ahead. Understand how your brand can stay relevant in a changing environment. Are there other ways in which the brand can use its authority for new ideas?

Kodak lost its footing when digital film took over haloid. While Kodak defended its past, Fuji focused on creating its future. Fuji saw that the company did not work on “film” per se; it worked with mol-ecules and elements. By seeing a bigger picture, Chairman Shigetaka Komori shifted the company’s focus away from film and into science, diversifying Fuji so it did not suffer from the severe decline of photo-graphic films. At the moment, Fuji is using the science of film in a skin care line, which is now an $80.7 million business. Its scientists under-stand that the gelatin used in film comes from collagen, and collagen is big business for youthful-looking skin. Additionally, Fuji is creating Ebola drugs, anti-aging potions, and stem cell research...all using the basics of its film technology. And now, continuing with the science of film, Fuji is looking into ventures in health care, whereas Kodak is in bankruptcy. 1 Interestingly, Fujifilm employees are being asked to think about new ways to use the elements of film in innovative ways. The company has a history of technology and scientific expertise that can be rerouted down different avenues for healthier, better lives.

Flextronics used to be an OED manufacturer of routers, PCs, and assorted basic electronics. A 46-year-old company, it recognized that the “Internet of Things” would have a massive impact on their business. Flextronics wanted that effect to be positive and profitable. So the company decided to remake itself in order to stay relevant

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in a fast-changing digital, mobile, information, and technology-laden world. Seeing an empty space, the company, now called Flex, cre-ated a collection of 130 component designs to help small companies “cobble together” their own devices faster and without supplier has-sle. Flex now has 23 R&D labs where customers can work together with Flex engineers, along with Flex hardware and software, to gener-ate prototypes. It remains to be seen whether this new approach to electronics will work. Revenue increases have been small. 2 However, looking lost relevance in the eye and doing something about it is bet-ter than going the way of Radio Shack.

Intel, the computer chip powerhouse, is investing in software that is used in cloud computing. As reported, Intel sees the future where some of its old friends may be left out. The head of chips for industrial-size computing centers said recently, “A new world is com-ing and it is inevitable. Everyone has to act differently.” 3

We discussed that some major industrial food brands have lost relevance. As the merger of Kraft with Heinz proceeds, we learn more about the future of Kraft as we know it: cost-cutting ruthlessness with factory closures appears to be happening. However, the postmortems on Kraft Heinz are an example of what happens when brands lose rel-evance with customers. Looking at the product brands that have lost revenue for more than three years such as Kraft singles (processed cheese product) and Cool Whip (that only added dairy recently), Bob Goldin, CEO of the research company Technomic, said, “Now these big food brands are old-fashioned. Consumers don’t see them as relevant.” 4 Analysts and apparently people inside the new company see Kraft’s iconic brands as having no growth potential. Kraft’s ex-CEO John Cahill was blunt when asked at the time of the Modelez split, “It’s clear that our world has changed and our consumers have changed, and our company has not changed enough.” This was only two months after his appointment as CEO. Observers, pundits, and analysts say that it is going to be extremely difficult to change consum-ers’ behaviors and attitudes when the brands have been around for so long. As one analyst said, the fact that Kraft took out artificial ingredi-ents in some of its products is a good step, but that is not the same as making people believe that Kraft products are real food. 5 The world has changed so remarkably that processed, artificially laden, factory-created foods are no longer seen as convenient, easy, or healthy.

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CHAPTER 27 • TRUTH #8: STAY RELEVANT 213

In the 1950s, Wonder Bread’s bleached white, sliced bread in a pack-age of red, yellow, and blue balloons indicating its injection of vita-mins and minerals was seen as a miracle product. Good moms gave their children sandwiches and toast of Wonder Bread. Now they will no longer put processed, white bread in their kid’s lunch box, let alone their grocery carts.

The belief that an established, iconic, big, traditional brand can-not change people’s minds is unfortunate. This was the negative mind-set when we arrived at McDonald’s in 2002. People inside the company said that the McDonald’s brand had peaked. This defeatist position was the reason the company under Jack Greenberg diversi-fied into brands such as Chipotle, Boston Market, Pret a Manger, and Donato’s Pizza. Those brands seemed to be the future while the McDonald’s brand was seen to have limited growth potential. In 2003, Jim Cantalupo refocused the efforts and resources on the revi-talization of McDonald’s.

The McDonald’s Plan to Win had as its goal to make McDonald’s more relevant. We accomplished this by focusing on our customers, their needs and occasions, new products that would satisfy their needs during specific occasions with a pricing strategy designed to match products to purse, and communications using our new approach, Brand Journalism. By changing the way McDonald’s worked with its agency partners, McDonald’s, using Freedom Within a Framework, created communications that looked at the size of the idea, not the size of the country or office that was creating the idea.

Unlike trust that takes time to rebuild, relevance can be renewed quickly. Relevance depends on news that makes sense for the cus-tomer and the brand. Of course, it is hard work, or difficult as Bloom-berg Businessweek said. But if you believe in the brand, it is worth doing. It may be that to be relevant again, the brand must move its focus into something different, like Fujifilm has. But, again, with proper resource allocation and deep-seated, passionate belief, brands can have a renaissance of relevance. Nissan became relevant again. Levi Strauss is working on relevance in a world of yoga pants. The Gap is refocused on relevance. Nestlé is making Lean Cuisine rel-evant in a world in which frozen is not a good word unless you are a yogurt bar.

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Decades ago, BBDO had a disciplined process that guided its work. It began with know your prime prospect and know your prime prospect’s problems. Only then can you focus on the breakthrough news. It is still good advice for renewing relevance. Know your prime customers and prospects. Know their desires and concerns.

Endnotes 1. Khan, Natasha, and Kiyotaka Matsuda, “Reinventions: Fujifilm

Develops a New Focus,” Bloomberg Businessweek , August 24–30,2015.

2. Burrows, Peter, “The Foxconn of Bathroom Scales,” BloombergBusinessweek , August 24–30, 2015.

3. Hardy, Quentin, “Intel to Invest in a Big Way in Software for theCloud,” The New York Times , August 24, 2015.

4. Berfield, Susan, and Noah Buhayar, “Things Are About to Get Uglyat Kraft,” Bloomberg Businessweek , August 24–30, 2015.

5. Ibid., Berfield and Buhayar.

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28 Truth #9: Move from Living Off Current Positive Momentum to

Creating Ongoing Positive Momentum

If you just ride the coattails of the momentum you inherited, it is certain that the brand will eventually slow down and will struggle to grow. We examined the propensity for living off momentum as a Ten-dency for Trouble. However, it is a truth that adding new momentum to current momentum is a way to stay out of trouble.

At each quarterly analyst meeting beginning in 2006, McDon-ald’s reaffirmed that the brand was continuing to ride the brand’s momentum inherited from 2005. (See the online McDonald’s case for the details at www.ftpress.com/sixrules .) In January 2006, CEO Jim Skinner said, “I’m pleased with the solid performance delivered under the Plan to Win and our ability to sustain the momentum we’ve created.” 1 In 2007, “Our customer-centric Plan to Win continues to drive McDonald’s sustained momentum and is generating broad-based growth in our business. I am encouraged by the progress of our European business and the momentum we’ve created through focused execution of the Plan to Win.” 2 From a spokesperson in 2009, “There’s this myth that we’re doing well because of the recession but the momentum began in 2003.” 3 As you will read in the accompany-ing online case review, there is nothing wrong with leveraging a great position, but the momentum of 2002–2005 was a turnaround strategy and not a long-term growth strategy. McDonald’s continued to follow a turnaround strategy and its associated actions, rather than evolve to a sustainable, profitable growth strategy.

During the summer of 2011, the CEO of Campbell Soup, Doug-las Conant, stepped down and the U.S. President Denise Morrison


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took over. There had been many successes at Campbell under Mr. Conant. But changes in consumer behavior and attitudes hurt the core products. The red-and-white cans of Americana saw declining sales as people were shopping differently and defining convenience and nutrition differently. Rather than use the same strategies that Mr. Conant used when things were going well, Ms. Morrison, focusing on top-line growth, took a year in which she completed three acquisi-tions and one major divestiture, signed two commercial agreements, and introduced nearly 50 new products across brand lines. 4 By con-tinuing to innovate, renovate, or buy innovations/renovations, Camp-bell Soup decided to keep the brand going through new life cycles rather than living off momentum of decades and riding the life cycle down to the ground.

When management rides the already established momentum without thinking about rejuvenating the brand life cycle, the brand slowly slips into a valley of despair. The truth is that this can be avoided by creating a new upward slope based on new ideas, innova-tions/renovations, and news.

Endnotes 1. The Wall Street Journal online , January 17, 2006, “McDonald’s

Delivers Strong December Comparable Sales,” Press Release.

2. Datamonitor NewsWire , April 20, 2007, “McDonald’s Q1 ProfitRises.”

3. Jargon, Julie, “Will Fast Food Slow? Investor Focus on McDonald’sResults as Recession Ebbs,” The Wall Street Journal , October 22,2009.

4. FD (Fair Disclosure) Wire , Campbell Soup Company at CAGNYConference—Preliminary, February 19, 2014.

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29 Truth #10: Institute Clear

Accountability

The most controversial discussion at any company is job descrip-tion. Early in our consulting work, a client asked us to write a mar-keting handbook. It took 72 versions before the senior team could agree to the content. Why? It had nothing to do with the content on marketing. It had everything to do with the way jobs were defined. Not only does job definition reflect status; it also reflects what you are accountable for in terms of management and leadership. When the manual was complete and agreed upon, the jobs of hundreds of senior and middle managers were clearly defined along with their revised responsibilities. Not everyone was happy.

Assignment of responsibility is a fascinating issue within an enter-prise. People want the responsibilities on paper. They do not want to lose the elements of responsibility. In fact, they will fight to the bitter end to retain every inch of responsibility. But then, many do not want to step up to the plate and be accountable for results of the actions for which they are responsible.

While we were working on the Collaborative Three-Box Model, we encountered the serious issue of “who is accountable” under lying the “Think Global. Act Local” approach to global marketing. In this previous model for marketing, the center was responsible for all the thinking, and the regions were responsible for implementing the thinking from the center. The regions would take responsibility for implementing the central demands and direction but did not feel accountable for the outcomes. This is all wrong. Most accountability is regional or local because this is where the customer comes in con-tact with the actual brand experience unless it is a completely global online experience such as Amazon. But even Amazon has differences

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by country. Brands must be organized so that responsibility and accountability align correctly.

At one client, the implementation of the Collaborative Three-Box Model was traumatic. Global leaders, who had been behaving as if they were regional and local managers, were not giving up respon-sibilities easily. These responsibilities defined who they were within the total organization. The group engaged a coach-psychologist to help them get over the fact that now they would be leading through education, influence, inspiration, support, and evaluation rather than by command and control. Brand leadership is global. Brand manage-ment is local.

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219

30 Truth #11: Change the Reward System

Building a strong internal brand-led culture is not just about doing the right things in the right way. It is also about rewarding the right things done in the right way. If employees are rewarded for vol-ume, or repeat purchase, or upselling for more revenues, they will focus on pushing to achieve these rewards. The customer experience may then be filled with moments of “pressure” to purchase some-thing additional. Do you really need that extra undercoating on your car? When you go to an airport kiosk, there is a page for purchase of extra miles. Do you really need these extra miles? Do you really need that extended warranty on the router you are buying? People manage what management measures and rewards. So if the company rewards on brand value detraction elements, employees will behave as brand value detractors.

Some car dealerships put pressure on the sales and service peo-ple to generate high, perfect satisfaction scores. A recent visit to a Toyota dealership in the Miami area ended with the salesperson rec-ommending that the purchaser provide the highest score on the satis-faction questionnaire she was about to receive. After leaving a Lexus dealership following a standard service visit, the car owner found a printed letter on the dashboard saying how important the visit was to the dealer and the salesperson and how important it was for the owner to say the service experience was excellent. These are not iso-lated incidents. These are examples of employees being rewarded for self-promotion. The company rewarded employees for perfect scores. The dealer and its employees tried to influence the scores through score manipulation tactics.

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Rewarding for brand-building behaviors must become part of the everyday culture and behavior. Everything employees do affects the brand’s perceived Trustworthy Brand Value.

Organization matters. At one large, global firm, reorganization combined the chief of sales and chief of brand in one job. Sales are a short-term focus; its focus is volume. Brand has a longer-term arc; it drives quality. Both volume and quality are essential for high-quality revenue growth. In this case, rewards were based only on achieving short-term sales targets. The brand suffered. Every brand initiative was a sales promotion initiative. It did not take long for the brand scorecard to reflect this brand devaluation.

Another example of a similar situation was slightly more blatant as the new leader adopted an internal mantra of “in the year, for the year.” If this is the approach, then any brand initiative that does not show results “in the year, for the year” will be irrelevant when it comes to achieving your bonus targets. And that is precisely what happened. All brand-building initiatives were relegated to steerage level.

To create a brand-led, customer-driven culture, management needs to institute a corporate-wide reward system that supports qual-ity of sales and quantity of sales. And the system must apply to those at the top as well as those at the lower and middle level of the food chain. The mere fact that you will be rewarded for brand building will begin to create a group of brand believers. Even a small group of brand believers can have an impact on an organization. In the early 1990s, the marketing people at Intel felt so strongly about a consumer cam-paign for the computer chip that they told management they would forego their bonuses if the program did not work. That behavior sig-naled to the engineers how serious the commitment to brand was.

For measuring rewards, it is important to have a system of metrics that gauges important brand measures beyond satisfaction. Satisfac-tion alone is not sufficient. Look at increases in Trustworthy Brand Value and Brand Preference. And make sure that the ways the mea-sures are evaluated are valuable for rewards.

When it comes to customer satisfaction, the competitive bar is being raised every day. Yet many marketers aim for acceptable sat-isfaction levels. They aim for good enough rather than aiming for “perfection.” Perfection may never be achieved, but it should be the

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CHAPTER 30 • TRUTH #11: CHANGE THE REWARD SYSTEM 221

aim. However, some clients are pleased with 80% satisfaction and very pleased with 90% customer satisfaction ratings. These less-than-perfect measures miss the point that 10%–20% of their customers are disappointed. If you are a big brand, 10%–20% is a lot of people. So it is critical to have the right measures and the right attitude about the measures. As the reward system is revised to measure brand, raise the bar, aiming for the highest levels of satisfaction on whatever metric is being used. Average scores lead to average performance. Employ-ees are customers, too. They know when they are being rewarded for actions that were not stellar.

As the share price at Alibaba was falling, the CEO, Daniel Zhang, told employees that their job was not to worry about the markets’ views of the brand. “Let us remember to keep our eyes on the true prize, which is serving our customers.... Serving our customers is the path to success to creating value for our shareholders and ourselves.” 1

Endnote 1. Clover, Charles, “Alibaba Staff Told to Focus on Their Jobs as Share

Price Fall Takes a Toll on Morale,” Financial Times , August 26,2015.

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31 Truth #12: Measure Results

Creating a results culture means creating a culture that is evalu-ated based on producing measurable results. As we discussed in Chap-ter 19 , “Rule 6: Realize Global Alignment,” building a results culture is essential for creating a brand mind-set. It is not just a functional event; it is a psychological event because measurement is more than data. The reason for the data needs to be articulated and brought into the veins of the organization. Results need to be measured, but peo-ple must be aligned around the measures; use the metrics not just to evaluate progress, but additionally to manage progress. Do not punish low scores, but learn from them. Reward and recognize performance.

There are several things to keep in mind when creating a results-oriented culture:

• Focus the organization around Trustworthy Brand Value. To be the best value, you cannot compete on price alone. Youcannot cost-manage your way to enduring profitable growth.Galvanize the organization around the new Trustworthy BrandValue Equation. This is a new way of looking at how the cus-tomer base perceives the worth of the brand. It means keepingeveryone aware of what the brand stands for, the level of trustpeople imbue in the brand, and the costs relative to experiencereceived.

• Build Brand Power. Powerful brands make money. The goalmust be to become the identity that is the most familiar, highestquality, leading, most trustworthy source of a relevant, differ-entiated promised experience. This means focusing on the fourcomponents of a powerful brand: identity, familiarity, special-ness, and authority. Employees need to think about more thanthe ad campaign or the digital awareness. They need to believe

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that everything they do affects what the brand is known for, how special it is, and what it is perceived to base its authority. Again, Brand Power is measurable. Put the Brand Power met-rics described earlier into place.

• Grow Brand Loyalty. A results-oriented culture will haveemployees, regardless of function, thinking about the ways inwhich they can move customers up the Loyalty Ladder. In fact,movement up the ladder is another metric that can be used forrewards and recognition. It is a mistake to have an organizationthat believes the only people who need to manage the customerare on the front line. Everyone should believe their personalgoal it to take care of the most loyal customers. Measure loyaltyand your brand’s progress on moving customers up the LoyaltyLadder.

• Increase Brand Preference. The aim is to have loyal cus-tomers who feel so strongly about your brand they will chooseit even if their second choice brand is cheaper. Brand Prefer-ence is the tightest bond of loyalty. Strategies must reflect earn-ing loyalty by rewarding attitudes and behaviors. People knowwhen they are rewarded for more usage. They also want to berewarded for their positive attitudes about the brand. Prefer-ence requires personalization. Be prepared to invest in newways of relating to brand enthusiasts that enhance how specialthey are to you and your brand. Measure brand preference.

• Understand Brand Rejecters. What are their problems?Know why people have problems with the brand. Why are theyturning away? How can you win these people back? Problem-solution should be at the basis of innovation and renovation.At McDonald’s, we understood that women were reluctant tobring their children to McDonald’s; they were tired of sittingaround watching their kids eat when there was nothing appeal-ing for the women to eat. A salad was the solution. Quantifycustomer problems and know which are both important andfrequently occurring.

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CHAPTER 31 • TRUTH #12: MEASURE RESULTS 225

• Measure what you want managed and rewarded. Measure more than just sales, share growth, and profit growth. Makesure the organization is aware that it is accountable for buildingboth quantity of share and quality of share simultaneously.

• Set SMART objectives. Ensure that everyone is working withthe same consistent, shared foundation. SMART objectivesdescribe the measurable goals that need to be met to achievethe vision. These metrics must be consistent over time, acrossbusinesses, and across geography. The SMART objectives havethe following characteristics: specific; measurable; aspirationalyet achievable; related to overall business growth; and timespecific.

• Once the measures are agreed upon, the organizationneeds to accept and act upon the results. Part of creating analigned organization involves trust. People need to accept theresults of the measures and move forward. This means analyze,interpret, and synthesize but do not manipulate. Results shouldnot be used to support preconceived opinions; results and dataare opinion neutral. Imposing preconceived notions on the datamay point people and resources in the wrong direction.

• Along with trust, people have to feel confident enough tomake decisions supported by reliable information. People need to believe that they have the information, the experience,and the confidence to make decisions. After all, data do notdecide. People are the decision-makers. Use the data to under-stand and prioritize the decisions that need to be made. Anactive, forward-moving, insightful organization should not getbogged down with analysis paralysis.

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Conclusion

How do brands get into trouble? What are the rules for brand revitalization? Why do some brands revert to bad habits? Once out of trouble, how can brands stay out of trouble and live forever? That is what this book is all about.

When we look back at the sea of changes between 2009 and today, it is startling to see the ways in which brands have evolved, positively and negatively. Technology, digital devices, mobile devices, social and economic upheavals, changes in the way people relate to one another, fractionalization of marketing, and media have altered the way we market brands. The pull of the three forces of globaliza-tion, localization, and personalization has offered new and exciting possibilities. Changing demographics, loss of institutional trust, and a new customer-perceived value equation, Trustworthy Brand Value, add brand opportunities daily.

The environment for brands has changed, but the rules for build-ing and revitalizing brands have not. Our Six Rules for Brand Revi-talization are still as powerful and relevant as they were when we used them as a framework for rejuvenating McDonald’s from 2002 to 2005. However, the new tools and technologies we have now add new dimensions for maximizing brand leadership.

In updating this book from 2009, many big brands have fallen into trouble. Why? What did they do or not do that made them lose their customer-perceived Trustworthy Brand Value? Having worked with many companies and brands over several decades, we synthesized the key observations we have about brand trouble. We also looked at how the Six Rules still apply, albeit in more contemporary ways. And then we looked at how brands, once they get back on their feet and adhere to the Six Rules, can stay out of trouble.

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We have said this several times already: brands do not have life cycles. They can live forever. Factories can burn down. Machinery can wear out. Founders can die. Technologies can become outdated. Not brands. Brands do not die natural deaths. Declines and deaths of brands are self-inflicted wounds that stem from mismanagement and nonbelief. Brands can grow in value over time if they’re properly managed. Valuable brands do not just happen. We must make them happen. Organizations and brand leaders must have a never-ending commitment to creating, nurturing, defending, and strengthening Trustworthy Brand Value leading to enduring profitable growth.

This is not easy, but the opportunities are endless. Brands can avoid falling into trouble and can stay out of trouble. Brands can revi-talize and return to not only health, but dynamic trustmarks.

The Twelve Tendencies for Trouble are habits to avoid. The Six Rules for Brand Revitalization still apply for re-energizing brands with robust health and profitability. And once your brand is back on its feet, stay out of trouble by implementing the Twelve Truths. As this book shows, the threats to brands do not come from generics or imita-tors or worldwide trends with social and economic consequences. The threats to brands come from the inside, from mismanagement, from lack of real leadership and marketing narrow-mindedness. Much of what hurts brands is self-inflicted. With proper, disciplined brand management, brand leaders can forge strong, enduring, and profit-able bonds with their customers.

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Index

A AA (American Airlines), 160 AB InBev, 59 accountability, 217 - 218 Ackman, William, 30 , 33 , 43 acting like a leader, 207 - 209 activist investors, 29 - 31 Alba, Jessica, 208 Alibaba, 221 Amazon, 39 , 109 American Airlines (AA), 160 American Express Centurion

Cards, 124 analyst satisfaction, focus on, 27 - 35 Anderson, Kerri, 179 Anheuser-Busch InBev, 55 Apple, 109 Apple Stores, 43 Applebaum, Rhona, 167 Arcature, 156, 196 arrogance of success, 11 - 15 Arrow Electronics, 11 , 75 - 76 authenticity, reinforcing, 199 - 201 Avon, 124

B B2B (business-to-business) market

segmentation, 98 BA (British Airways), 101 - 103 Bachelder, Cheryl, 11 , 60 , 69 , 87 ,

119 , 160 backtracking to basics, 51 - 54

229

The Balanced Scorecard: Translating Strategy Into Action (Kaplan and Norton), 67

Banana Republic, 73 Barclays Bank, 23 barriers, organizational, 23 - 25 basics, returning to, 51 - 54 Beals, Vaughn, 14 Belfiore, Joe, 53 Bell, Charlie, 12 , 18 - 19 , 63 , 66 ,

75 , 127 Bethune, Gordon, 11 , 69 , 118 , 137 better measures (Brand-Business

Scorecard) brand reputation, 143 - 144 overall satisfaction, 144 - 145

bigger measures (Brand-Business Scorecard)

familiarity, 141 penetration, 141 - 143

BlackRock Inc., 27 BlackBerry, 1 , 60 Blackshaw, Rick, 104 Bonobos Clothing, 123 Brand-Business Scorecard, 67-70,

140-154 Brand Character, 99 Brand Claim, 99 brand decline, practices for

preventing . See also revitalization acting like a leader, 207 - 209 breaking down silos, 197 changing reward system, 219 - 221 creating positive momentum,

215 - 216

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230 INDEX

defining strategy for profitable growth, 195 - 196

instituting accountability, 217 - 218 institutionalizing change, 191 - 193 making demographics matter,

203 - 206 measuring results, 223 - 225 overcoming cultural resistance,

187 - 190 reinforcing authenticity, 199 - 201 staying relevant, 211 - 214

brand experience, reinventing, 107 Brand Journalism, 131 - 134 changing perception of value, 114 deal loyalty versus brand

loyalty, 116 fair value, 115 - 116 Five Action Ps

people, 117 - 120 place, 123 - 126 price, 127 - 129 product, 120 - 123 promotion, 129 - 131

innovation and renovation, 107 - 110

marketing, 110 - 113 total brand experience, 116 - 117 Trustworthy Brand Value, 114 - 115 value equations, 113 - 114

brand failures, 75 culture, 78 - 79 knowledge, 79 leadership, 75 - 77 organization, 77 - 78

brand goals, refocusing, 88 - 90 Brand Journalism, 131 - 134 brand loyalty, 116 , 145 - 146 , 224 brand power, 149 - 151 , 223 brand preference

brand preference ladder, 147 - 148 increasing, 224

Brand Promise, 88 - 90 , 99 - 104 , 176 Brand Character, 99 Brand Claim, 99

Brand Support, 99 British Airways (BA), 101 - 103 Chipotle, 100 consequences of failing to deliver

on promise, 103 - 104 McDonald’s, 100 - 101 Saint-Gobain Performance

Plastics, 101 Sperry, 104

Brand Purpose, 88 - 90 , 176 brand rejecters, understanding, 224 brand relevance, restoring, 91

Brand Promise, 99 - 104 Brand Character, 99 Brand Claim, 99 Brand Support, 99 British Airways (BA),

101 - 103 Chipotle, 100 consequences of failing to

deliver on promise, 103 - 104 McDonald’s, 100 - 101 Saint-Gobain Performance


market knowledge, 91 - 93 needs-based occasion market

segmentation, 93 - 98 brand reputation, 143 - 144 Brand Support, 99 brand value. See value brand-business building practices .

See also revitalization acting like a leader, 207 - 209 breaking down silos, 197 changing reward system, 219 - 221 creating positive momentum,

215 - 216 defining strategy for profitable

growth, 195 - 196 instituting accountability, 217 - 218 institutionalizing change, 191 - 193 making demographics matter,

203 - 206 measuring results, 223 - 225

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INDEX 231

overcoming cultural resistance, 187 - 190

reinforcing authenticity, 199 - 201 staying relevant, 211 - 214

Brand-Business Scorecard, 67 - 70 , 140 - 154

brand loyalty, 145 - 146 brand power, 149 - 151 brand preference ladder, 147 - 148 brand reputation, 143 - 144 familiarity, 141 Five Action Ps, 151 - 152 normative data and, 152 overall satisfaction, 144 - 145 penetration, 141 - 143 trust, 148 - 149

branding mistakes arrogance of success, 11 - 15 backtracking to basics, 51 - 54 building of organizational barriers

and bureaucracy, 23 - 25 complacency, 17 - 20 corporate and brand failures, 75

knowledge, 78 - 79 leadership, 75 - 77 organization, 77 - 78

disregard for changing world, 71 - 73

failure to innovate, 41 - 44 focus on analysts rather than

customers, 27 - 35 lack of Brand-Business Scorecard,

67 - 70 lack of focus on core customer,

47 - 50 lack of Plan to Win, 63 - 66 loss of relevance, 55 - 60 overview, 2 - 3 , 8-9 unwillingness to change, 37 - 40

breaking down silos, 197 British Airways (BA), 101 - 103 Brolick, Emil, 87 - 88 Brown, Michael, 24 Bryant, John, 72

Buffet, Warren, 13 , 19 bureaucracy, 23 - 25 Burger King, 70 , 72 , 92

focus on analysts rather than customers, 34

focus on core products, 51 business-to-business (B2B) market

segmentation, 98

C Cadillac, 146 , 192 Cahill, John, 212 Calloway, Wayne D., 12 Campbell Soup Company, 1 , 31 - 32

backtracking to basics, 53 brand goals, 88 demographic changes, 205 disregard for changing world, 72 failure to innovate, 42 , 109 innovation and renovation, 42,

107, 215 loss of relevance, 56 - 57 market segmentation, 96 - 97 organization failures, 77 - 78 Plan to Win, 65 , 118

Cannon, Janis, 109 Cantalupo, Jim, 12 , 63 , 75 , 84 , 88 ,

119 , 127 CFT (cross-functional team), 157 change


institutionalizing change, 191 - 193 unwillingness to change, 37 - 40

changing perception of value, 114 chief marketing officer (CMO),

112 - 113 Chipotle, 65 - 66 , 110 , 126

Brand Promise, 100 , 161 openness and transparency, 164

Chrysler, 13 Clark, Alan, 55 Clinton, Hillary, 27

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232 INDEX

CMO (chief marketing officer), 112 - 113

Coca-Cola, 166 failure to innovate, 109 focus on analysts rather than

customers, 32 loss of relevance, 58 unwillingness to change, 37 - 38

Collaborative Three-Box Model, 112 - 113 , 182 - 184 , 217 - 218

Collins, Jim, 11 comfort of complacency, 17 - 20 commitment

external commitment, 159 internal commitment, 156 - 159

complacency, 17 - 20 Conant, Douglas, 56 , 65 , 77 , 118 ,

215 Continental, 11 , 69 - 70 , 118 , 137 convenience food market, 43 core customers, focus on, 47 - 50 Cornell, Brian, 25 , 72 corporate failures, 75

culture, 78 - 79 knowledge, 79 leadership, 75 - 77 organization, 77 - 78

Corporate Social Responsibility (CSR), 167 - 170

cost reduction approach to revitalization, 84 - 85

Coty, 97 Courduroux, Pierre, 85 craft brewing industry, 41 , 95 Crainer, Stuart, 39 cross-functional team (CFT), 157 Crowne Plaza Hotels, 109 CSR (Corporate Social

Responsibility), 167 - 170 culture

failures, 78 - 79 overcoming cultural resistance,

187 - 190

customers customer satisfaction, 27 - 35 , 220 focus on core customer, 47 - 50 needs and occasions, 57

D Darden, 30 - 31 de Nysschen, Johan, 146 , 191 deal loyalty, 116 debate, leading, 161 - 163 defining strategy for profitable

growth, 195 - 196 delivering on promises, 160 - 161 Delta, 121 demographics, 203 - 206 Dillon, Mary, 101 disregard for changing world, 71 - 73 documents

Brand-Business Scorecard, 67 - 70 Plan to Win, 63 - 66

Domino’s, 160 , 161 Donahue, Mike, 48 , 163 Dorsey, Jack, 8, 162 Drezler, Millard (Mickey) E., 65 Drucker, Peter, 35 , 38 Dunlap, Albert, 86 DVorkin, Lewis, 133 Dyson, 149

E Easterbrook, Steve, 48 , 65 - 66 , 162 Edmond, Luiz Fernando, 59 education, 188 effort, 153 - 154 Eli Lilly, 23 Ells, Steve, 100 , 110 , 126 , 161 emotional value, 154 Encore Capital Management, 205 evaluation, 190 external commitment, 159

ptg16675719

INDEX 233

F Facebook, 197 failures, 75

culture, 78 - 79 failure to innovate, 41 - 44 knowledge, 79 leadership, 75 - 77 organization, 77 - 78

fair value, 115 - 116 familiarity, 141 Faucher, John, 58 financial discipline, 83 - 86 Fink, Larry, 27 Five Action Ps, 151 - 152 , 177 - 178


Flextronics, 211 Floersch, Rich, 137 focus

focus on analysts rather than customers, 27 - 35

lack of, 47realizing global alignment, 175

Ford, 13 Freedom Within a Framework,

173 - 174 Fuji, 211 functional value, 154

G Galston, William A., 27 The Gap, 73

backtracking to basics, 53 loss of relevance, 58

General Motors, 161 Gerstner, Lou, 11 , 64 , 75 , 89 getting back to basics, 51 - 54 Ghosn, Carlos, 11 , 64 , 69 , 75 , 130 .

See also Nissan

global alignment, 173 Collaborative Three-Box Model,

182 - 184 focus, 175 Freedom Within a Framework,

173 - 174 Plan to Win, 175 - 182

Five Action Ps, 177 - 178 Wendy’s Plan to Win, 179 - 181

GM (General Motors), 161 GMO labeling, 200 goals (brand), refocusing, 88 - 90 Goldberg, Stephen, 19 Golden Gate Capital, 30 Goldin, Bob, 212 Google, 39 , 108 Greenberg, Jack, 75 , 83 , 213 Grove, Andrew, 14 growth

defining strategy for, 195 - 196 low- versus high-quality growth,

137 - 138

H H Partners Management, LLC,

17 - 18 H&M, 48 , 58 , 127 Harley Davidson, 14 Harper, Stephen, 159 Heinz. See Kraft Heinz Co. Hennequin, Denis, 163 high-quality growth, 137 - 138 Holacracy, 14 The Honest Company, 208 Hotel Indigo, 123

I Iacocca, Lee, 13 Ibarra, Herminia, 207 IBM, 11 , 75

brand goals, 89 Plan to Win, 64

ptg16675719

234 INDEX

relevance, 59 silos, 24

IKEA, 127 influence, 188 - 189 innovation, 41 - 44 , 107 - 110 Insead, 207 inspiration, 188 instituting accountability, 217 - 218 institutionalizing change, 191 - 193 Intel, 14 , 212 InterContinental Hotels and

Resorts, 162 internal commitment, 156 - 159

J J. Crew, 64 - 65 Jaguar, 142 JCPenney, 43 - 44 , 49

innovation without understanding market, 121 - 122

Plan to Win, 63 - 64 , 121 Jenkins, Antony, 23 Jenkins, Holman W., 39 Jobs, Steve, 11 John Lewis, 164 Johnson, David, 32 , 42 Johnson, Ron, 43 - 44 , 49 , 63 - 64 , 121 journalism, Brand Journalism,

131 - 134 Jung, Andrea, 52

K Kaplan, Robert, 67 Karmel, Annabelle, 162 Kashi, 109 Kaufman, Steve, 11 , 75 Kay, John, 71 Kellogg, 13 , 72 , 88 , 109 Kent, Muhtar, 32 , 37 - 38 , 58 ,

167 , 170 KFC, 121

knowledge failures, 79 market knowledge, 91 - 93

Kodak loss of relevance, 211 unwillingness to change, 39

Komori, Shigetaka, 211 Kraft Heinz Co., 1

cost reduction approach to revitalization, 85

focus on analysts rather than customers, 33 - 35

loss of relevance, 212 - 213 Kroc, Ray, 113 , 127 , 169 , 173

L Lafley, A.G., 7, 33 Lam, Wayne, 24 Lazare, Lewis, 100 leadership

acting like a leader, 207 - 209 failures, 75 - 77 leadership behaviors, 187 - 190 leadership marketing, 86 - 88

leading debate, 161 - 163 Lean Cuisine, 59 Lederhausen, Mats, 84 Lego, 48 , 120 Levi Strauss, 19 , 95 Lewis, David, 85 Light, Larry, 63 , 101 Limited Time Offer (LTO), 129 localization, 182 Long, Tom, 41 LongHorn Steakhouse, 30 - 31 loss of relevance, 55 - 60 low-quality growth, 137 - 138 loyalty

deal loyalty versus brand loyalty, 116

growing, 224 LTO (Limited Time Offer), 129

ptg16675719

INDEX 235

M Mackey, John, 73 Macy’s, 48 making demographics matter,

203 - 206 market knowledge, 91 - 93 market segmentation, 93 - 98 , 121 marketing

Brand Journalism, 131 - 134 Collaborative Three-Box Model,

112 - 113 leadership marketing, 86 - 88 responsibilities, 110 - 113

Marlboro, 124 Marriot, 30 Marshall, Colin, 101 - 103 Mattel, 51

bureaucracy, 25 failure to innovate, 43 leadership, 209

McDonald, Bob, 33 McDonald’s, 1 , 109

avoidance of arrogance, 12 avoidance of complacency, 18 - 19 backtracking to basics, 51 brand loyalty, 142 disregard for changing world,

71 - 72 focus on analysts rather than

customers, 32 lack of focus on core customer,

47 - 48 leadership, 75 , 208 momentum, 215 Plan to Win, 63 , 65 - 66 , 177

people, 118 - 119 place, 125- 126 price, 127 - 128 product, 122

rebuilding brand trust becoming a trustworthy

source of information, 165 leading debate, 161

openness and transparency, 163 - 164

revitalization brand goals, 89 financial discipline, 83 - 84 innovation and renovation,

108 - 110 operational excellence and

leadership marketing, 88 value equation, 113 - 114

staying relevant, 213 unwillingness to change, 38 - 39

McFarlane, John, 23 measurable milestones, 138 - 139 measuring results, 223 - 225 Mega Brands, 25 Microsoft, 53 , 121 milestones, measurable, 138 - 139 Millennials, 72 - 73 MillerCoors, 95 , 124 mistakes

arrogance of success, 11 - 15 backtracking to basics, 51 - 54 building of organizational barriers

and bureaucracy, 23 - 25 complacency, 17 - 20 corporate and brand failures, 75

knowledge, 78 - 79 leadership, 75 - 77 organization, 77 - 78


failure to innovate, 41 - 44 focus on analysts rather than



47 - 50 lack of Plan to Win, 63 - 66 loss of relevance, 55 - 60 overview, 2 - 3 unwillingness to change, 37 - 40

ptg16675719

236 INDEX

momentum, creating, 215 - 216 Mondeléz, 30 money value, 153 Monsanto, 85 Morrison, Denise, 215 Motorola, 59

N Nakamura, Shiro, 64 needs-based occasion market

segmentation, 93 - 98 Nestlé, 59 Newman, Paul, 165 Nissan, 11 , 64 , 69 , 75 , 130 , 146 normative data, 152 Norton, David, 67 Novak, David, 140 Nysschen, Johan de, 146 , 191

O Old Navy, 73 Olive Garden, 30 - 31 , 144 openness, 163 - 164 operational excellence, 86 - 88 Optimus Performance, 19 organization

failures, 77 - 78 organizational barriers, 23 - 25 organizational refocus

brand goals, 88 - 90 leadership marketing, 86 - 88 operational excellence, 86 - 88

overall satisfaction, 144 - 145 refocusing, 79 , 83

brand goals, 88 - 90 financial discipline, 83 - 86 leadership marketing, 86 - 88 operational excellence, 86 - 88

overcoming cultural resistance, 187 - 190

Ozley, Lee, 14

P P&G, 33 , 97 Pace, Raymond, 101 Pandora, 29 Paull, Matt, 32 , 86 Peltz, Nelson, 30 penetration, 141 - 143 people, 117 - 120 , 177 Pepsi, 12 perfection, aiming for, 220 PetSmart, 125 place, 123 - 126 , 177 Plan to Win, 63 - 66 , 175 - 182

Five Action Ps, 177 - 178 people, 117 - 120 place, 123 - 126 price, 127 - 129 product, 120 - 123 promotion, 129 - 131

Wendy’s Plan to Win, 179 - 181 Popeye’s, 11

innovation and renovation, 109 operational excellence and

leadership marketing, 87 Plan to Win

people, 119 product, 121

purpose and principles, 69 rebuilding brand trust, 160 relevance, 60

positive momentum, creating, 215 - 216

power (brand), 223 price, 127 - 129 , 178 problematic behaviors. See

troubling behaviors processed foods industry, 92 product, 120 - 123 , 177 profiling market, 96 promise (brand), 88 - 90 , 99 - 104 , 176 promotion, 129 - 131 , 178 Publix, 92 purpose (brand), 88 - 90 , 176

ptg16675719

INDEX 237

Q-R Radio Shack, 126 Randall, Theo, 162 real estate investment trust (REIT),

30 - 32 realizing global alignment, 173

Collaborative Three-Box Model, 182 - 184

focus, 175 Freedom Within a Framework,

173 - 174 Plan to Win, 175 - 182

Five Action Ps, 177 - 178 Wendy’s Plan to Win, 179 - 181

rebuilding brand trust, 155 becoming a trustworthy source of

information, 165 - 167 Corporate Social Responsibility

(CSR), 167 - 170 definition of trust, 156 delivering on promises, 160 - 161 external commitment, 159 internal commitment, 156 - 159 leading debate, 161 - 163 openness and transparency,

163 - 164 Trust Capital, 170

recognition, 139 - 140 Red Bull, 132 Red Lobster, 30 - 31 Red Robin, 29 - 30 refocusing organization, 83

brand goals, 88 - 90 financial discipline, 83 - 86 leadership marketing, 86 - 88 operational excellence, 86 - 88

Reichheld, Frederick, 49 reinforcing authenticity, 199 - 201 reinforcing results culture, 137

low- versus high-quality growth, 137 - 138

Trustworthy Brand Value Brand-Business Scorecard,

140 - 154

measurable milestones, 138 - 139

overview, 138 recognition and rewards,

139 - 140 reinventing brand experience, 107

Brand Journalism, 131 - 134 changing perception of value, 114 deal loyalty versus brand

loyalty, 116 fair value, 115 - 116 Five Action Ps


innovation and renovation, 107 - 110

marketing, 110 - 113 total brand experience, 116 - 117 Trustworthy Brand Value, 114 - 115 value equations, 113 - 114

REIT (real estate investment trust), 30 - 32

relevance, loss of, 55 - 60 relevance of brand, restoring, 91 ,

211 - 214 Brand Promise, 99 - 104

Brand Character, 99 Brand Claim, 99 Brand Support, 99 British Airways (BA),





segmentation, 93 - 98

ptg16675719

238 INDEX

renovation, 42 , 107 - 110 reorganization, 78 reputation (brand), 143 - 144 restoring brand relevance, 91

Brand Promise, 99 - 104 Brand Character, 99 Brand Claim, 99 Brand Support, 99 British Airways (BA),





segmentation, 93 - 98 results, measuring, 223 - 225 results culture, reinforcing, 137

low- versus high-quality growth, 137 - 138

Trustworthy Brand Value Brand-Business Scorecard,

140 - 154 measurable milestones,

138 - 139 overview, 138 recognition and rewards,

139 - 140 Return on Global Learning

(ROGL), 93 revitalization

realizing global alignment, 173 Collaborative Three-Box

Model, 182 - 184 focus, 175 Freedom Within a

Framework, 173 - 174 Plan to Win, 175 - 182

rebuilding brand trust, 155 becoming a trustworthy

source of information, 165 - 167


definition of trust, 156 delivering on promises,

160 - 161 external commitment, 159 internal commitment, 156 - 159 leading debate, 161 - 163 openness and transparency,


refocusing organization, 83 brand goals, 88 - 90 financial discipline, 83 - 86 leadership marketing, 86 - 88 operational excellence, 86 - 88

reinforcing results culture, 137 Brand-Business Scorecard,

140 - 154 low- versus high-quality

growth, 137 - 138 Trustworthy Brand Value,

138 - 154 reinventing brand experience, 107

Brand Journalism, 131 - 134 changing perception of

value, 114 deal loyalty versus brand

loyalty, 116 fair value, 115 - 116 Five Action Ps, 117 - 131 innovation and renovation,

107 - 110 marketing, 110 - 113 total brand experience,

116 - 117 Trustworthy Brand Value,

114 - 115 value equations, 113 - 114

ptg16675719

INDEX 239

restoring brand relevance, 91 Brand Promise, 99 - 104 market knowledge, 91 - 93 needs-based occasion market

segmentation, 93 - 98 rewards, 139 - 140 , 219 - 221 Ritz-Carlton, 20 ROGL (Return on Global

Learning), 93 Rules of Revitalization , 3, 81-82

realizing global alignment, 173 Collaborative Three-Box

Model, 182 - 184 focus, 175 Freedom Within a

Framework, 173 - 174 Plan to Win, 175 - 182

rebuilding brand trust, 155 becoming a trustworthy

source of information, 165 - 167





refocusing organization, 83 brand goals, 88 - 90 financial discipline, 83 - 86 leadership marketing, 86 - 88 operational excellence, 86 - 88

reinforcing results culture, 137 Brand-Business Scorecard,

140 - 154 low- versus high-quality

growth, 137 - 138 Trustworthy Brand Value,

138 - 154

reinventing brand experience, 107 Brand Journalism, 131 - 134 changing perception of

value, 114 deal loyalty versus brand

loyalty, 116 fair value, 115 - 116 Five Action Ps, 117 - 131 innovation and renovation,

107 - 110 marketing, 110 - 113 total brand experience,

116 - 117 Trustworthy Brand Value,

114 - 115 value equations, 113 - 114

restoring brand relevance, 91 Brand Promise, 99 - 104 market knowledge, 91 - 93 needs-based occasion market

segmentation, 93 - 98

S SAB-Miller, 55 Saint-Gobain Performance

Plastics, 101 Sam’s Club, 127 Sarvary, Mark, 17 , 64 - 65 satisfaction

customer satisfaction, 220 overall satisfaction, 144 - 145

Schultz, Howard, 11 , 24 , 168 Scion, 125 Schwartz, Daniel, 9segmentation of market, 93 - 98 , 121 Sephora, 58 services, 120 - 123 , 177 silos

as barrier to growth, 23 - 25 breaking down, 197

Skinner, Jim, 19 , 32 , 51 , 63 , 101 , 113 , 177 , 215

SMART objectives, 225 social value, 154

ptg16675719

240 INDEX

Sony, 24 - 25 Sorkin, Andrew Ross, 28 Sperry, 104 Sperry, Paul, 104 Stanton, John, 34 Starboard, 30 - 31 Starbuck’s, 24 , 128 - 129 , 168 Starwood, 30 staying out of trouble. See Truths

for Staying Out of Trouble staying relevant, 211 - 214 stock buybacks, 28 Strasser, David, 49 strategy for profitable growth,

defining, 195 - 196 stronger measures (Brand-Business

Scorecard) brand loyalty, 145 - 146 brand power, 149 - 151 brand preference ladder, 147 - 148 trust, 148 - 149

Subway, 87 support, 189 - 190 Surowieki, James, 28

T Target, 25 , 48 , 72 , 127 TD bank, 124 Technomic, 212 Tempur Sealy, 17 - 18 Tendencies for Trouble, 2 - 3


and bureaucracy, 23 - 25 complacency, 17 - 20 disregard for changing world,

71 - 73 failure to innovate, 41 - 44 focus on analysts rather than


67 - 70

lack of focus on core customer, 47 - 50

lack of Plan to Win, 63 - 66 loss of relevance, 55 - 60 overview, 7-9 unwillingness to change, 37 - 40

Tesco, 52 , 85 Thompson, Don, 39 3G Capital Partners LP, 11 - 15 ,

34 , 70 Tim Horton’s, 34 time value, 153 total brand experience, 116 - 117 Toyota, 125 transparency, 163 - 164 trouble, avoiding. See Truths for

Staying Out of Trouble troubling behaviors


and bureaucracy, 23 - 25 complacency, 17 - 20 disregard for changing world,

71 - 73 failure to innovate, 41 - 44 focus on analysts rather than



47 - 50 lack of Plan to Win, 63 - 66 loss of relevance, 55 - 60 overview , 2 - 3 , 7-9 unwillingness to change, 37 - 40

trust, 148 - 149 . See also Trustworthy Brand Value

definition of, 156 rebuilding brand trust, 155

becoming a trustworthy source of information, 165 - 167


ptg16675719

INDEX 241



163 - 164 Trust Capital, 138 , 170 Trustworthy Brand Value,

114 - 115 , 223 Brand-Business Scorecard,

140 - 154 brand loyalty, 145 - 146 brand power, 149 - 151 brand preference ladder,

147 - 148 brand reputation, 143 - 144 familiarity, 141 Five Action Ps, 151 - 152 normative data and, 152 overall satisfaction, 144 - 145 penetration, 141 - 143 trust, 148 - 149

measurable milestones, 138 - 139 overview, 138 recognition and rewards, 139 - 140 value equation

effort, 153 - 154 emotional, 154 functional, 154 money, 153 social, 154 time, 153 value, 153

Truths for Staying Out of Trouble acting like a leader, 207 - 209 breaking down silos, 197 changing reward system, 219 - 221 creating positive momentum,

215 - 216 defining strategy for profitable

growth, 195 - 196 instituting accountability, 217 - 218

institutionalizing change, 191 - 193 making demographics matter,

203 - 206 measuring results, 223 - 225 overcoming cultural resistance,

187 - 190 overview, 185-186reinforcing authenticity, 199 - 201 staying relevant, 207 - 209

Twelve Tendencies for Trouble. See Tendencies for Trouble

Twelve Truths for Staying Out of Trouble. See Truths for Staying Out of Trouble

Twitter, 8, 162

U Ullman, Mike, 63 - 64 Uniqlo, 48 United Airlines, 2

V value, 153

changing perception of, 114 fair value, 115 - 116 Trustworthy Brand Value, 114 - 115

Brand-Business Scorecard, 140 - 154

effort, 153 - 154 emotional value, 154 functional value, 154 measurable milestones,

138 - 139 money value, 153 overview, 138 recognition and rewards,

139 - 140 social value, 154 time value, 153

value equations, 113 - 114 Velez, Paco, 169 Verizon, 132 VW, 159

ptg16675719

242 INDEX

W Walgreens, 48 Wal-Mart, 48 - 49 , 127 Walton, Sam, 127 Wendy’s, 2 , 72

operational excellence and leadership marketing, 87 - 88

Plan to Win, 121 , 179 - 181 Whole Foods, 73

demographic changes, 204 - 205 perception of value, 114

Williams, Brian, 159 Williams Sonoma, 92 Windows 10 release, 53

X-Y-Z YUM!, 140

Zappos, 14 Zara, 127 Zhang, Daniel, 221

six rules of brand revitalization: learn the most common branding mistakes and how to avoid them

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