Welcome to the Red Sky Insights blog. Our goal is to create a forum for lively discussion and debate on the subject of brands.
While our brand experience and capabilities are broad, our business purpose is to help our clients close the gap between brand promise and delivery. By viewing brands through the lens of corporate strategy, we are able to identify the operational resources, activities and related investments that will be required to deliver on the brand promise.
We welcome your comments and suggestions.
A recent article appeared in BusinessWeek (April 16, p58 - or see it here http://www.businessweek.com/magazine/content/07_16/b4030071.htm?chan=search
Basically, Eddie Lampert who runs/owns Sears and KMart has issued bonds to the value of $1.8bn based on the Kenmore, Crafstman and Diehard brand names. “In essence, [Sears] has transferred ownership of the brands to another entity, which it then pays for the right to use the brands…” the article goes on to say “…the market in bonds backed by intangible assets could be even bigger thn the market for junk bonds, given that 70% to 80% of the total value of the stock market rests on intangibles…”
This struck me as very, very interesting given that Sears has, essentially placed a value on its three core brands and now has the opportunity to monetize them quickly (in the same way, the article points out, David Bowie monetized his songs by selling bonds backed by royalties to the songs for $55m). Given the spate of leveraged takeovers by private equity companies, I imagine that a number of these folks are considering how to unlock the value of the brands that they are buying into. And if they can do this easily, they will be on the prowl not only for underleveraged companies that can generate cash, but underleveraged companies that have underleveraged or strong brands. This will bode well for companies like Interbrand who can provide some sense of the value of the brands (although its still a little too ‘black box-y’ for me) as well as for ad agencies and brand consultancies who know how to build brands quickly.
I think we’ll be hearing a lot more about securities like these in the near future.
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April 17th, 2007
Roger van den Bergh of Onoma (www.onomadesign.com) who is a guru in airline design sent me a great article about a good airline experience (how rare they are these days). It’s worth a read. The only disappointing thing is that the author had a great experience but he was flying first class. It would be great to see stories of good customer experiences on coach!
Read it here:
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April 11th, 2007
An important part of activating the brand is our Brand Action Workshops. In these workshops we usually work with specific departments or business units to identify gaps between the current situation and the desired brand vision.
Enemies of successful Brand Action Workshops
I’ve been thinking a lot about Brand Action Workshops and what makes some more or less successful. I’ve done a lot of these, so much of what in this post has been learned via error and perfect hindsight. I’ll post these issues one by one and hopefully get your comments.
1.Hubris:
The least successful workshops are those in where the manager and his or her dept has little or no self awareness about what makes them ‘good’ or ‘bad’. Very often this is a result of hubris. A few years ago I ran some workshops in an organization in which every department complained about another particular department (let’s call them dept X). Just about everything was blamed on Dept X from poor sales results to global warming. Yet when I did the Brand Activation Workshop with Dept X, not only the top managers of the dept thought that they were doing a great job. It was as if they were living in a bubble. Too often we do workshop where we rely on self-reported strengths and weaknesses. While this may work, I’ve found workshops are infinitely more helpful if we present some form of ‘objective’ data for the managers to respond to, even if it’s anecdotal. The point is to provide some sort of challenge and provoke a reaction. For example “It’s interesting that you think that everyone in the company is happy with process ABC when in actual fact I’ve heard a great deal of complaints about it” More next week.
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March 21st, 2007
Speaking of operationalizing your brand, I tried to log on to USAirways website and forget it. Tried calling their reservations line and waited 25 minutes only to get an operator who put me on hold with a wait time of another 30 minutes.
How long can the airlines use the Valentine’s Day storm to justify the absulutely deplorable treatment of travelers? I’m now convinced that the notion of a Passenger’s Bill of Rights should be adopted by the Congress and airlines should start paying penalties for their disregard and mistreatment of flyers.
Their recent trend to profitability has been won at the expense of the traveling public, with non-existent reservations service. lost bags and rude staff.
What’s your view?
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February 19th, 2007
In an effort to understand the broader operational issues related to brands and branding, our recommended reading extends beyond articles and publications that focus solely on the subject of brands.
We will call to your attention, articles and publications that we believe are worthy of your review, offering our rationale for recommending them.
If you have suggestions or feedback, we hope you will contact us.
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January 19th, 2007
“L.L. Bean, The Making of an American Icon”
Leon Gorman, Harvard Business School Press, Boston, 2006
No one will ever admit that operational branding is easy, because it is not.
What I really like about this book is Leon Gorman’s straight talking, open narrative about the highs and lows of being the curator of one of this country’s most respected and admired brands.
Throughout the narrative, he includes the innermost thoughts of his senior leadership team in an effort to illustrate the true challenges of honoring the brand legacy he inherited, by living it in every phase of the business.
Leon Gorman’s ability to bare his soul, exposing his own weaknesses, second thoughts and deepest concerns about this inherited legacy, are truly inspiring.
Perhaps Bob Peixotto, SVP and COO, says it best:
“ For me as an employee I’ve loved L.L. Bean because it hasn’t been about making a buck. We made money and that was great. But it’s been about creating a social institution that could become something you could be very proud to be associated with.” (p. 178)
Another quote from David Garvin, HBS Professor and author of Managing Quality, states:
“…the first thing (Leon) did, was he stayed true to the vision, the second is that he knew how to enact that brand of values into product service. There is a perfect alignment between what the company stands for and what it has historically delivered for this product and service. Third, he built an extraordinary organization and management machinery. And then he attracted some very talented people.” (p. 274)
L.L. Bean has endured and will continue to endure as long as those entrusted with its leadership keep the spirit and values of L.L. Bean alive both in themselves and across the organization. This belief was a source of Gorman’s inner strength, providing him with the ability to make it through the difficult times when others would have changed course or been tempted to give up.
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January 8th, 2007
Simply Better – Patrick Barwise and Sean Meehan, Harvard Business School Press, Boston, 2004
Given all of the brand practitioners who are advocating that we dissect the customer experience in minute detail, there’s definitely something to be said for keeping it simple.
The authors provide us with a well-reasoned approach to managing customers that is based on the following points:
- customers want better, not more differentiated products and services
- companies should place more executional focus on meeting customer’s basic needs
- “product categories matter more than individual brands” (p.13)
They further point out “that customers rarely buy a brand because it offers a unique feature or benefit. Rather, they usually buy the brand that they perceive as offering the best overall combination of category benefits.” (pgs. 23-24)
At the heart of the customer experience is the ability for executives, managers and relevant employees to understand more deeply how customers think and respond not just to our brand promises, but to the delivery of those promises on a consistent and meaningful basis. It’s refreshing to know that customer expectations are actually not that complicated. Unfortunately, we have a tendency and desire to make things a lot more complex than they need to be.
Simply Better belongs in every marketer’s and brand builder’s library if only to remind us that, when it comes to customers, it is better to keep things simple.
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December 19th, 2006
Managing Customers as Investments – Sunil Gupta and Donald R. Lehmann, Wharton School Publishing, 2005
What can we say about two distinguished scholars who have the ability to immerse themselves in complex research investigations and at the same time, share their findings in ways that are relevant to everyday marketing and branding practitioners?
Gupta and Lehmann are respected academics who also happen to have deep ties to the Marketing Sciences Institute, an organization that we highly respect.
Managing Customers as Investments advances one of the best arguments on the subject to date by bridging the all-to-often ignored gap that exists between marketing and finance. While we have for some time accepted the notion that customers should be seen as assets, we have not yet commonly adopted the belief that programs designed to attract and retain customers should be treated as investments. We have also not embraced the real link between customer and shareholder value because we have been too transaction versus relationship-oriented in our thinking.
The authors provide us with a number of very informative and data-rich chapters that outline the steps to understanding the investment value of customers.
We especially like Chapters 5 and 6, which speak directly to the ways an organization can retool to become more customer-based. There’s a lot of practical, actionable advice that marketers will find useful here.
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December 18th, 2006
