15 Years of The World's Most Competitive Brands

A philosopher once said, "Everybody loves you until you become the competition". In a world where brands are competing for mind share and marketers are promising to help you beat your competition, getting consumers fall in love with your brand, the battle between brands has never been greater.

"Brands are no longer competing against each other, they are competing against speed". Marc Benioff 

I've been thinking about this for some time and I heard a few weeks ago that the average attention span while someone is flicking through their apps in now less than 5 seconds. Essentially, that means we must maintain a competitive advantage by being faster than our competitors, whilst offering a better service at a cheaper price. Good advice for supermarkets or investment bankers* perhaps, but not always for everybody else. (*The Michael Lewis book Flashboys explains how UBS stood to make an extra $20Bn each year by trading just 3/1000 faster than their competitors). 

The problem with competition is that business today offers a level playing field. In the past companies of a certain size competed with each other and your postcode or your resources dictated who you competed with, and how likely you were to win. Since 2004 though, the scale of social media has allowed businesses of any size to compete with each other (regardless of media budgets). Brands are now looking over their shoulder wondering where their next competitive threat is coming from. Just consider Uber. They are successfully disrupting one of the world's most established industries, and are currently valued at around $51Bn despite being just five years old. Cloud computing and social networks have allowed them to scale like no other business in the history of the world, and they are now growing at around 50,000 new drivers each month. This month alone they are making plans to recruit 1,000 developers, in build upon the 359 cities that Uber already serves. Competitively, Uber is worth ten or twenty times more than it's two closest rivals combined, despite being much later to the marketplace than many of the other car service companies that they compete against. 

Researchers have been examining this changing landscape and have discovered hundreds of challenges that businesses are apparently facing in 2015. Narrowing them down to the two which mattered most, research agency Gartner said that they were:

1. Generating profitable revenue.
2. Dealing with competition in the market place.

Making money. Understanding what your competitors are up to. Next on the list of priorities was understanding the needs of your customers but it came a distant third. And this, I believe, is the main problem with a large part of the business landscape today.

We are too obsessed with the competition.

I remember talking to executives at Ford a few years ago who were obsessed with creating a new innovation for their new SUV. Compare that to executives I spoke to at another global automotive brand a month earlier and they told me that their daily priority was to examine competitive analysis, looking to learn from what they were doing and "keep up-to-date with industry trends". Don't get me wrong ~ knowing what your competitors are up to is important. But understanding the needs of your customers is way better.

"I'd rather keep our competitors focused on us, while we stay focused on the customer". Jeff Bezos (Amazon).

Or if you prefer...

"The competitor to be feared is one who never bothers about you at all, but goes on making his business better all the time". Henry Ford.

What I find fascinating is that in my 20 years in the marketing industry, it is always the 2nd and 3rd in the market place who are obsessed with their competition. When I was launching iPhones in a previous role years ago, I remember how little thought Apple seemed to give to what was going on in the marketplace, but how much time Samsung spent obsessing over the very same thing. 

Jack Welch from GE, arguably one of the finest CEOs of all time once said, "If you don't have a competitive advantage, don't compete", but he also admonished business leaders on his training courses to remember these three fundamental goals of business:

• Number #1: Cash is king.
• Number #2: Communicate.
• Number #3: Buy or bury the competition.

This is all noble advice when given to the right person at the right time, but it's also easy to under-estimate how distracting (and counter-productive) focusing on your competition can be. In recent years Tesco have become so obsessed with focusing on their competitors that Aldi have now overtaken them as the UK's most valuable supermarket brand. They don't seem to have learned either. Their most recent promotion? "We'll price check your shopping against our competitors (Asda, Waitrose and Sainsbury's but not Aldi or Lidl) and discount your bill at the check out". The fact that Tesco are selling off various divisions, showing a ￡6.4Bn pre-tax loss and suffering from a poor Moody's credit rating might be evidence enough that such tactics haven't been that good for business after all. Perhaps every little doesn't really help. Tesco need something BIG.

"The secret of success? Be first. Be better. Be faster. Be cheaper. (Choose two)". Anon

In his book Zero-to-One, Peter Thiel (Pay-Pal co-founder and the first outside investor in Facebook) agrees. He suggests that fastest route to failure is a business trying to capture a small percentage of a large market. Thiel says that "competitive markets destroy profits" and instead of competing for marginal gains, brands should instead focus on seeking a competitive advantage so strong that it gains them some form of a monopoly. Ask yourself ,"What valuable company is nobody building?" or "What one truth do few people agree with you on"? According to Thiel, that's where you should build your business. Think eBay, Amazon, PayPal, Facebook, Tesla.

Speaking at a press conference in China a month ago, the CEO of Uber (currently the world's fastest growing company), chose slightly stronger language. I'm paraphrasing, but Travis Kalanick basically said that "brands should be run like political parties. And not the kind that seek to win an election 51-49 - but the kind that try to destroy the competition and win 98-2".

So...

With all this in mind I thought I would do some research of my own and have a look at how the largest brands in the world have conducted themselves and their businesses over the last 15 years. I thought that this would be a significant enough time frame given that 2000 was the dot.com boom and the years that followed included the dot.com bubble bursting, the birth of social networks, smart phones, big data and the more recently the internet of things.

[See this graphic animated].

For the data I looked to brand agency Interbrand with a view to looking at how competition has impacted brand valuations over the last 15 years. This graphic tells so many different stories - the dot.com survival of eBay and Amazon, the death of Nokia, the challenges that Intel, BMW and Marlborough have faced, and the consistency of Coca-Cola ~ but I will focus on one and leave you to explore the others. 

First think about the way that we view competition in business. Brands like to talk about community, the sharing economy and collaboration, but in reality the way that brands conduct themselves is quite different. We compare business to war. We read Sun Tzu. We use headhunters to build a sales force that will enable us to take a captive market and make a killing. In reality it's competition, not business, that is like war: allegedly necessary, supposedly valiant, but ultimately destructive. 

In war, the more different two sides are, the more likely they are to fight (over land, religion, culture, resources) but in business it is quite the opposite. Look at the way that Microsoft and Google have developed over the last 15 years. Originally inhabiting quite different territories (Microsoft built office and an operating system whilst Google wrote a search engine), they didn't have much to fight about. But as both companies grew and became more anxious about mindshares and share prices, their business strategies, operations and acquisition strategies became very much alike. The result? Windows vs Chrome OS, Bing v Google Search, Explorer vs Chrome, Office vs Docs and Surface vs Nexus.

The outcome? 

Just as both sides pay a price when they are fighting each other, this battle cost Microsoft and Google their dominance and a large chunk of their market share ~ because while all this was going on, in came Apple and over took them all. Ranked #33 in 2007, #24 in 2008, #20 in 2009, #17 in 2010 and entering the top 10 in 2011, Apple's brand valuation has exploded from $5.46Bn in 2000 to $170Bn today. Just two years ago, Apple's market capitalisation was $500Bn while Google and Microsoft combined were worth $467Bn. (Apple is worth $750Bn today). Just three years before in 2010, Microsoft and Google were each more valuable than Apple. And let's not forget that Apple was just three months away from bankruptcy when Steve Jobs took back the helm as CEO in 1997. Apple's rise has been truly spectacular and shows that war is costly business.

Moral of the story?

While it would be negligent to ignore any competition within our marketplace, we must make whatever allowances to prepare for any attacks. I know several companies who even have internal "SWAT" teams who's only job is to look for ways to disrupt their own business in order to maintain a competitive advantage. 

"The world may now be too competitive for loyalty". Wall St. Journal (1994)

 It's a nice story that Steve Jobs never did competitive analysis or held focus groups ("because people don't know what they want until you show them"), but in my experience, the most successful companies are usually the ones who keep a watchful eye on the competition, but make it their number one priority to understand their customers needs. Who are they? What do they want? Why do they want it? When do they want it? And where do they want to get it from?  

"There's a misconception that survival of the fittest means survival of the most aggressive. The adjective 'Darwinian' used to refer to ruthless competition; you used to read that in business journals. But that's not what Darwinian means to a biologist; it's whatever leads to reproductive success". Stephen Pinker 

Further reading?

• Research: Interbrand 2015 Global Brands Report
• IBM CEO Report 2015: Competition v Customers
• Methodology: Interbrand Valuation
• Read: Zero-to-One by Peter Thiel
• Article: Uber and the Spirit of Competition (Vanity Fair)
• Watch: Travis Kalanick talking about Uber's competition (Fireside chat at Dreamforce 2015).