Strategygram: The Brand Driver's Warning Signs

“I fell in love the way you fall asleep: slowly, then all at once,” confesses Hazel in John Green’s novel,?The Fault in Our Stars.

Brands slide into sorrow the same way: slowly, then suddenly.?

Unspool your memory, back to the heydays of the Pentium processor. There was a time—oh, so long ago—when buyers of personal computers were inclined to snuggle into the reassuring comfort of a specific brand of processor, even if—or, rather, because?—they didn’t know exactly what a microprocessor accomplished within the belly of a computer.?

Then, over time, other features in laptops and desktops—screen size, screen resolution, battery life, types of ports, what-have-you—elbowed their way into the buyer’s consideration, jostling aside the relative importance that consumers placed on obtaining a computer with a specific brand of processor.?

To make matters worse, the rise of adjacent categories, such as smartphones and tablets, strengthened this trend of consumers shuffling away from pressing for a specific brand of processor.??

Brands slide into sorrow the same way: slowly, then suddenly.

Another cautionary tale is conjured up by the viral popularity of digital devices, about how the functionality associated with one category bleeds into another. For decades, camera manufacturers had attracted happy snappers with simple, low-end products, knowing that some of this influx would eventually flow through to more profitable higher-end cameras. But then came the smartphone, which not only subsumed camera functionality with increasingly finer levels of quality, but went further, enabling users to instantly upload photos and videos on to social media platforms. Capturing the moment segued into sharing the moment.

The functionality associated with one category bleeds into another

And when it comes to disruptions—ranging from pandemics to regulatory mandates—everybody knows that Internet telephony and video calls stepped in for travel and commuting, while home-delivery aggregators ate into the profitability of restaurants.

When the harbingers of decline, mergence, or disruption have come into view, when futzing over the?what-ifs, why-nots, and what-abouts is futile,?what does a brand do? It?re-perceives,?redirects, and?reinvents.

What does a brand do? It?re-perceives,?redirects, and?reinvents.

“I remember a time in the middle of 1985, after this aimless wandering had been going on for almost a year,” Andy Grove writes in?Only the Paranoid Survive.?“I was in my office with Intel’s chairman and CEO, Gordon Moore, and we were discussing our quandary [the onslaught of Japanese low-cost manufacturers who had slashed Intel’s market share from 60% to 35%]. Our mood was downbeat. I looked out the window at the Ferris wheel of the Great America amusement park revolving in the distance, then I turned back to Gordon and I asked, ‘If we got kicked out and the board brought in a new CEO, what do you think he would do?’

Gordon answered without hesitation, ‘He would get out of memories.’

I stared at him, numb, then said, ‘Why shouldn’t you and I walk out the door, come back and do it ourselves?’ ”

That’s what you need to do: mentally walk out of the door and back in,?re-imagining not just the situation but also who you should be in it.?

You re-perceive things, internal and external, because yesterday’s view of the future won’t take you where you want to be.

You mentally walk out of the door and back in,?re-imagining not just the situation but also who you should be in it.?

For instance, the world’s largest exporter of dairy products today—accounting for about 30 percent of the world’s dairy exports—shifted its gears of growth by moving from thinking of milk as liquid to milk as food.

Or again, take that tiny company—the “ant at the picnic” as its then-detractors characterised it—whose founder-CEO saw giant companies like Oracle and SAP selling software that had to be cumbersomely updated on the customer’s premises and so asked himself that one hinge question which flung open the door of opportunity: “What if I create a cloud-delivery model, turning software into a service where customers can pay for it the way they pay their monthly utility bills such as for electricity, thereby freeing customers to run business applications whenever and wherever?”?

That question—successfully answered—transformed the ‘ant’ into the first cloud-computing company with US$1 billion in annual revenue, evolving it into the world’s largest enterprise-software firm with a current market cap around US$ 150 billion. Welcome to the ant’s picnic.

Are the connections between trends, or the consequences of their knock-on effects, intuitively self-evident? Almost inevitably their subtle significance will emerge as a slow-reveal, the speed of the divulgence being precisely proportional to the acuity of the observer. Not all marketers of headphones, for example, quickly anticipated the booming opportunity opened up by open-plan offices.

Almost inevitably their subtle significance will emerge as a slow-reveal, the speed of the divulgence being precisely proportional to the acuity of the observer.

Re-perceiving your situation—what’s changed, what needs to change—allows you to redirect your focus with startling clarity.?

When the iconic co-founder of that Cupertino-based company returned as interim CEO in September 1997, the company was less than 90 days from a handshake with insolvency. The company was so entirely innocent of focus that Phil Schiller, recruited back into the company by the co-founder, described the situation as: “It was insanity. Tons of products, most of them crap, done by deluded teams.”?

Often obscure is that boundary between productive persistence and otiose obstinacy.

“Deciding what?not?to do is as important as deciding what to do,” asserted the co-founder. In one brand strategy session, he stunned everybody by shouting “Stop!”, grabbing a magic marker, and drawing two lines, one horizontal and one vertical, to create four quadrants on the whiteboard.?

On top of one column he wrote ‘Consumer’ and on the other, ‘Pro’. He labelled one row ‘Desktop’ and another ‘Portable’. That, he declared, was going to be the company’s focus: just four great products, one for each quadrant. That’s it. Everything—everything—else would rendezvous with the guillotine.??

What happened? The company zipped from a loss of US$ 1.04 billion in the previous fiscal year to a profit of US$ 309 million in the next.?

And from that focused stance—so resonant of the poet Cathy Smith Bowers’ call: “Dazzle me with clarity”—the company invented a slew of world-beating products: from an mp3 player to a smartphone to a digital tablet, all within the co-founder’s tragically truncated lifetime.

Often obscure is that boundary between productive persistence and otiose obstinacy.

“Like many people, I came back from holidays in 2019 thinking my life would go in a certain direction in 2020,” said the co-founder-CEO of the world’s biggest aggregator of short-term vacation rentals.?

“Then, all of a sudden, I felt like a captain whose ship was hit by a torpedo. Within eight weeks, our business dropped 80 percent. That’s like a car going 80 miles an hour and you slam on the brakes.…The way a company handles a crisis is often the way the leader handles the crisis, and that comes down to that leader’s psychology. The hardest thing to manage in a crisis isn’t your company—it’s your own thoughts.”

The company altered course: it?doubled down?on its core offering of home rentals, shedding its hotel and luxury property rentals; it?pulled back?from its forays into transportation and entertainment; it?shuttered?its ‘Experiences’ division, where one-of-a-kind immersive activities were curated and hosted by local experts, in contrast to ho-hum tourist tours; it?trimmed costs, retrenching 1,900 people, about 25 percent of its global workforce; and it?safeguarded?its cash position by raising money, securing US$ 1 billion in equity from private equity firms Silver Lake and Sixth Street Partners.?

The ensemble of in-company efforts was matched with customer-facing initiatives: it?instituted?a full-refund policy for last-minute cancellations; it?introduced?Flexible Search where, unlike hotel search sites which require a customer to put in fixed destinations and dates, intending holiday makers could search freely for anything from weekend getaways to months-long vacations; it?established?an ‘Enhanced Cleaning’ protocol that hosts could herald with a badge on their listings; it?launched ‘Online Experiences’, progressively featuring over 700 virtual sessions, from pasta-making lessons by hosts in Italy to a song writing session in Nashville to conversations with professional athletes around the world. (After the pandemic, the company resumed its in-person Experiences in 70 countries.)?

The result? For financial year 2021, year-over-year bookings jumped by 59 percent and revenue leaped by 70 percent. The latest available results—for third-quarter 2022 earnings, reported in November 2022—confirmed “the biggest and most profitable quarter ever despite geopolitical and macroeconomic headwinds.”?

The company retained its leadership as the number one online travel company globally. With 4.86 million listings, it sports a bigger portfolio than the top five hotel brands combined (Marriott International, Hilton Worldwide, Intercontinental Hotel Group, Wyndham Worldwide, and Accor Hotel Group), and sees its closest hotel-brand competitor, Marriott International, trailing with its 1.26 million guest rooms.

Furthermore, the company has grown in brand strength, entering—for the first time—Interbrand’s annual ranking of Best Global Brands 2022 (coming in at number 54) and Kantar’s BrandZ Top 100 Most Valuable Global Brands 2022 (featuring at number 99).

A crisis—current or coming—is an invitation to reinvent your brand for the emerging scenario. Falling in love or falling asleep isn’t volitional; following through on warning signs is. Warning signs always offer a choice: you can act on them, or you can live through their aftermath.

In the history of brands, that has never changed.

Sattar Khan

This Strategygram titled ‘The Brand Driver’s Warning Signs’ is part of the series I’ve created where each Strategygram condenses one strategic thought into one image.?

The series is a visual guide to strategic thinking and provides handy image prompts for brand strategy workouts.??

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