Marketing Memos

When does a brand become detrimental to a company?

Ask Google. They are having a relatively rough time with their brand this week.

Google encountered trouble during the corporate equivalent of a temper tantrum. When they discovered that someone in China (presumably the government) had hacked into Google’s network and spelunked through dissident emails, Google threw a hissy fit. Executives at the all knowing Google failed to know that the government of the People’s Republic of China (PRC) remains one of the most ruthless around. Google should have known this since Google helped the PRC censor Internet information in order to (according to the PRC) “Properly guide Internet opinion.”

Kinda evil, eh?

Google’s brand started dissolving. In Google’s infancy, they adopted an informal corporate motto of “Don’t be evil.” This kindly directive even found its way into Google guiding manifesto “Ten things we know to be true”, a creed that doubled the simpler tradition established by Bill and Dave, of Hewlett and Packard fame, and their five item “HP Way”. On Google’s top ten list is the ideal that “You can make money without doing evil.” The cynics (realists) among us recognize this isn’t a prohibition against doing evil things, just a recognition that it isn’t essential.

The problem was that Google and their admirers amped-up the “don’t be evil” mantra into a core branding element. Google employees view themselves as not evil. Their admirers have nominated Google for digital sainthood. The population in general bought this part of the brand …

Through ignorance they ignored Google’s complicity in Chinese censorship, which is evil.

It was Google’s reaction to being hacked by their partners in civil liberties crime that dinged the Google brand. When Google threatened to cease censoring searches in Shanghai, people asked “Why are you censoring now?” Adages for doing no evil collided with evidence of doing evil. A core and central aspect of the brand was t-boned by reality.

Foremost, brands must be authentic, or at least branding lies must never be discovered. Take used car salesmen … somewhere … please … preferably to the free side of a cliff. Our common perception of these snaky lemon squeezers is opposite of how they sell themselves, as trustworthy and helpful enablers of transportation. The brand they promote conflicts with your perception of them while you stand on the highway shoulder waiting for a tow truck. He sold you “Honest Bill’s Used Cars”, but you now want to buy large caliber ammunition instead.

Honest clunkers. Don’t be evil, but censor.

When composing your brand, you had better base it on something impregnable, lasting and real. Reality is as consistent as gravity and tends to have the same terminal impact. Base your brand on something authentic and that you can keep authentic. Don’t be evil and don’t be a used car salesman.

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BMW and Enzyte may have too much in common.

While reviewing course materials for the CEO Marketing Boot Camp, I got a case of giggles. In the class we mention how BMW does branding. BMW has a legendary brand that was anything but accidental. In fact most readers can recite the BMW slogan from memory and yet never question it. That is how good BMW is at defining and communicating their brand – they have us all educated and convinced.

The BMW slogan is interesting to marketing experts because it never mentions automobiles or technology (and BMWs are technology products). BMW claims to provide the “ultimate driving experience.” Ultimate means the best. Driving is a largely male oriented passion. Experiences are what we live for. So BMW offers a greatly enhanced male life, just like Enzyte claims.

I’m sure the people at BMW are not happy about this comparison because the rest of the jokes write themselves.

BMW’s branding is only part of their marketing success, which is matched by their automotive engineering success. BMW’s marketing and innovation are well paired. Peter Drucker, the father of modern management once said “Business has only two basic functions – marketing and innovation.” Everything else is administrative work. In Silicon Valley, we have more innovators per square inch than we have square inches to spare, and most innovators fail. They only have half of the success equation.

Having sat-in on too many funding pitches, the absence of marketing expertise among founders (the innovators) is often painfully obvious, and has been the reason for many funding rejections. This is an endemic aspect of start-ups – that visionaries lack go-to-market strategy skills. This is not in and of itself fatal if the founders can recruit good marketing people or otherwise find sage advice, and then follow it. However, visionaries are blinded by vision. Their initial observations about market opportunities keep them from examining the full scope of go-to-market issues or unpleasant market realities. Founders are often reluctant to release control over the marketing function yet do not possess enough marketing strategy savvy to guide their organization.

The end result is fairly predictable. These visionary-led start-ups find initial traction with early-adopters, who are also visionaries and risk takers. After that initial success, the start-up stalls. Revenues plateau or decline, the company burns through what little cash it has, and the visionary solution vanishes or is cloned by someone else. If the start-up is funded, investors will often insert members of their cabal into the organization and attempt to instill marketing strategy discipline from above. In desperate circumstances VC’s find ways to eject the founding visionary.

This “investor patch” is notoriously ineffective. Founders fail to follow advice or control because their vision is limited to the set of circumstances that lead them to invent. They cannot see the forest of marketing strategy because they are climbing the tree they originally discovered. It is a little like love. Try explaining to a child what being in love is like and you will create a bored or confused kid. But once they grow up and experience love, they understand the broader and more detailed aspects. Visionary founders are like these confused kids – they do not have enough perspective to comprehend what they need to do.

This is the visionary entrepreneur’s handicap. Successful founders either have significant (albeit high-level) grasp on the major functions of marketing strategy, or they have the guts to recruit and trust experts. Most founders don’t do either, and thus most start-ups fail. I find this state of Silicon Valley affairs to be perplexing. Technology innovators are not ignorant people. They have worked long and hard to achieve deep understanding of their technologies, yet rarely labor at understanding marketing strategy. They may read one of the Chasm books and proclaim themselves well prepared. This is akin to reading a book on the basic mechanics of a parachute and then lobbing yourself out of an airplane. The results are amazingly similar either way.

Peter Drucker was right – an organization must innovate and market. In a start-up, where early decisions define survivability, and where the money to hire full-time strategists simply does not exist, the marketing savvy of founders is critical. Venture capitalists know this, and VCs send portfolio CEOs to school to assure that daily marketing disciplines are being lead from the top. VC’s are happy when one-in-ten of their investments pays off – but they would be happier if ten-in-ten did. Hedging their bets by building better CEOs is the primary path to achieving better investment odds.

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Investor’s Business Daily had an interesting report from ABI Research showing that now, and through 2014, iPhones and gPhones will dominate the smart phone application platform market. Combined they will own about 60% of the market in the out years, with all other competitors in the ‘other’ category.

That includes Microsoft.

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Desperate times create desperate marketers.

Such seems to be the case with Sequoia Voting Systems, a manufacturer of electronic voting machines (known among libertarians as ‘election hijacking devices’). Sequoia recently announced that they were opening the source code for their Frontier balloting systems.

A wise move, aside from the fact that it exposes Frontier as being Microsoft based. I know nobody who would trust their vote to be counted by the same people who brought you Clippy (It looks like you are trying to vote. Would you like me to cast your ballot for you?).

For reader who have resided in Tora Bora for the past decade, electronic voting machines were thrust upon the American public in a fit of panic. In the 2000 elections, a few senile seniors in Florida could not navigate paper ballots. Since the appointment of the next president was to be based on fewer votes than all the elderly dementia patients in Boca Raton, some people demanded radical changes in election processes. Congress did what they do best, and threw nearly endless stacks of cash at the problem without first taking time to understand the problem itself.

Electronic voting machines are intended to replace manual punch card machines. Many manufactures rushed products to market since the several states had tons of federal cash to toss around. The list of vendors included Sequoia, which received some unfortunate product reviews. Since votes are sacred, miscounting votes is demonic. Thus, e-voting vendors need to prove their systems are incapable of error, can not be hacked, and that your vote will be faithfully recorded and tallied.

Programmers everywhere laugh aloud.

This created a marketing problem for e-vote vendors. People buy when there is an imbalance between desire and resistance – pull verses friction. People desire iPhones, but Steve Jobs would not sell many if they cost $5,000 and exploded every time you put it to your ear. So Steve created favorable imbalance by pricing the iPhones in the $200 range (if you ignore the monthly $30 wireless data tax) and reduced iPhone explosions to mere meltdowns.

E-voting is allegedly desired, but is held in high suspicion by voters with functioning neurons. System failures and very public displays of vulnerability to hackers create a lot of friction as well as a few pitchfork-and-torch mobs heading for their county elections office. These woes tend to hamstring all e-voting vendors equally, though a few are held in more suspicion than others.

Would you trust your vote to the same people who make ATM machines?

A good marketing strategist knows that the best way to win a market is to change the rules. Attacking a competitor’s strength is a classic maneuver where the rule (“they are successful because they are good at yada yada”) itself is challenged.

The status quo in the e-voting biz was created by friction, namely the belief that e-voting machines are corruptible. So Sequoia changed the rules by opening their system source code (with limitations and in small batches) in an attempt to skate past the market friction. This puts their competitors on the defensive and forces them to follow suit or be held with more suspicion than Sequoia … a race up from the bottom. Issues remain, such as the full, final and complete release of the code, review by independent programmers who would love to find defects, and admission that using Microsoft was Sequoia’s first mistake.

Once Steve Ballmer comes to my office and fixes XP, then I might trust my vote to their operating system.

There are two marketing lessons in Sequoia’s saga. First, friction is deadly. Great marketing strategists research the barriers to adoption, removing all of them that they can. This makes products easy to buy, and those are products that fly off the shelf. Second, Sequoia sought to change the rules of the game. They saw that the rules (hiding their source code so they could claim security by obscurity) was causing every vendor to lose. So they flipped the switch, changing darkness into light and forcing their competitors to scurry like cockroaches.

Good for Sequoia, though I still won’t vote using their gear.

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It has been a bad week for brands, and it is only Tuesday.

Between Tiger Woods’ early morning mishap and certain global warming scientists being exposed as frauds, we have seen two well established brands bite bullets. Nobody believes that Tiger Woods was out for a 2AM joyride and happened to lose control of his car while leaving his driveway. His squeaky clean image is tarnished, and though not debilitating to his multi-million dollar income, his personal brand will not carry him as smoothly as before.

Certain scientists lost much more when email and computer modeling code was hijacked and disclosed to the public. In less than three days the word “climategate” – which had not previously existed – has 13.4 million references in Google whereas “global climate change” and a mere 0.5 million. Those emails and comments in source code show that “scientific consensus” never existed, was straggled at birth (i.e., the peer-review stage), and that Al Gore’s Nobel Prize might be recalled (I made that last one up, just to goad Gore’s goat and make Al nervous). These scientists have no future career though they may have future cellmates. The brand of “concensus science” no longer exists and the brand of “global climate change” is now negative.

Brands are interesting abstractions. The concept of a brand is simple, and Silicon Strategies Marketing articulated it best when we wrote:

Branding is making the market think and feel what you want it to about you and your products.

The hard part of branding is making up your mind about what the market should think and feel. The harder part is making it stick. Companies fail at branding because they do not know or properly delegate the three roles of brand management:

• It is marketing’s job to define the corporate brand, though it typically happens accidentally and largely based on founder’s biases.
• It is the CEO’s job to make everyone in an organization aware of what the corporate brand is and why it is important.
• It is every employee’s job to live the brand.

When marketing clearly defines and documents the desired brand, it becomes easier to communicate. People will parrot anything that they instinctively agree with. Employees will ape a corporate brand if they know what it is and it is not abjectly inaccurate. But none of this happens if marketing fails to define it with precision and reduce it to a simple, repeatable concept.

Even CEOs need help. Often the CEO sets the brand based on the boldness of his leadership. Take Larry Ellison and Oracle. Their brand image in the technology market place is not pretty, but it is effective. Larry set the brand early and reinforced it vigorously. Call it what you like – “evil empire”, “death star”, “the matrix” are all common Silicon Valley pseudonyms for Oracle, even among Oracle employees. But the brand is consistent and if nothing else oozes strength.

The point is that the CEO must carry the ball to the employees every day of their working life. When Bill and Dave drafted the HP Way, they established an enduring brand (that temporarily succumbed to a succubus). The HP Way was a simple set of rules for employee behavior that in turn created the HP brand. Bill and Dave did their job and marketing’s job too.

Employees, when given simple and clear branding, will live it. Circuit City – back when it was a healthy and growing concern – had a brand based on customer service, and that brand was broadcast throughout the company and in the house organ. So clear was the message that one newsletter article told of a Circuit City deliveryman who hauled an upright freezer a mile down the road to the customer’s house after his truck broke down. He was not going to let the Circuit City brand fail that customer.

In the technology biz, brands are largely left to rot. Tech companies have the misfortune of being founded by technologists, who view the world as a rules-based logic engine. They often believe that features and benefits drive every decision, and they could not be more wrong. Even iron cast CIOs have emotional functions that need to be nurtured during a sales cycle. Since part of selling is having a clear, believable and beneficial brand, your brand will make or break sales.

Let me give you an example. I was chatting with an old techie buddy of mine who mentioned putting in an order for 100 new X64 servers the day before, and that he ordered from HP. I asked him why HP and he said he simply believed they made the best hardware available. I probed a bit more and discovered that he had not read one comparison report nor did he have a lot of experience with IBM, Dell or any other vendor. HP’s brand made the sale.

If you are a CEO and you cannot repeat your internal band statement, give us a call. It is never too late to get this right because eventually your competitors will.

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