AOL Unplugged
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Carly Fiorina’s time at Hewlett Packard and Louis Gerstner time at IBM proved that decentralized management of product lines in a large company is the only sane management strategy.
Lou took an ailing and heavily centralized IBM, and saved it from extinction by decentralizing its product categories. Carly took a healthy, decentralized HP and tried to kill it through heavy centralization.
Now AOL, the perennial poster child for developmentally disabled technology, has seen the light and is decentralizing (while some of their executives face jail time) .
AOL — which lost the ISP wars by failing to add value in broadband, and whose Time Warner appendage lost the portal wars by failing to provide appetizing content — is now decentralizing their content components to the point of debranding — jettisoning the AOL name. Given the tarnished AOL brand image, debranding their targeted web properties is essential lest the fractured pieces of the empire carry the lingering stench of failure.
AOL is creating new — and re-branding old — web properties that are largely devoid of any reference to the centralized AOL moniker. By making each web property (product) a separately branded entity, each site can create its own identity and appeal to highly targeted markets. This amplifies the appeal of each, making the properties stronger.
(This is a lesson Yahoo may take to heart - weakness in one business may create a weak brand image for all other components. Hence Yahoo’s reluctance to be acquired by Microsoft lest Yahoo products suffer even more brand debasement.)
Herein is where branding in large organizations is problematic. If one or more products/divisions are strong, there is the potential for that brand strength to carry into the other divisions. For example, HP’s strength in printers has led many people to buy their often unreliable laptops.
But the reverse is true. I used to manage large HP data centers, and had problems with their proprietary MPE operating system — for a while it crashed too frequently for mission-critical work. During that period I rushed to visit a relative in intensive care, and I was not happy to see her hooked-up to a number of HP medical monitoring devices. The weakened MPE brand created in me a negative prejudice for their medical products.
In web properties — where the subject matters presented on a web site may be audience specific (say teenage boys vs. geriatric women) — decentralized branding is essential. Contrary to common belief, segregating the brands does not eliminate potential synergies.
Take SourceForce.com (formerly VA Software) who has a number of technology industry web sites, on which they sell a ton of advertising. They reap significant synergies from different web properties that have at best sporadic cross traffic. The branding needs for their IT manager’s web site is very different than their Linux junkie web site.
Take two of AOLs newly branded properties — Asylum, a site for young men, and WalletPop, a site devoted to personal finance (a topic with which young men are largely unfamiliar). Pulling both of those under the torn AOL umbrella would do neither property any favors. But allow each to tailor the entire brand to their members is favorable … and thus smart.
The marketing issue here is multifaceted. First, you must decide if there is any real cross-over between the product areas. If so, a unified brand might do you some good. If there is no cross-over, then odds are the unified branding will not help in the slightest and may actually hurt.
Second, does the parent brand offer any specific advantage? HP has a strong overall technology brand, and it generally helps all of their product categories. AOL does not, and thus the AOL brand may hurt the individual web products.
Finally, top management has to have the strength to let go. Decentralizing and allowing subordinates make both strategic and tactical decisions about the decentralized products and brands takes guts. But the bigger and more diverse your company is, the more important decentralising will become.
