How do you build a successful brand? This is by far one of the most important and intriguing questions that CEOs and brand managers ask themselves. It is only understandable. As competition increases, product life cycles become short lived, customers jump ship more often and disruptive technologies threaten the existing business models. This leaves companies turning to building brands. Powerful brands aided by engaging experiences, compelling value propositions and aspiring symbolic value allow companies to overcome the challenges of attracting and retaining customers.
However, recently, another trend has been gaining momentum. Brands that have been iconic for a very long time are beginning to falter. Despite being iconic brands that defined their respective industries, ushered in new products and services, and innovated business models, these brands have fallen behind the times and eventually by the wayside. However, not much is known about how to protect and nurture an iconic brand. Even more important, what factors need to be taken care of by the CEOs and brand managers to ensure that an iconic brand stays relevant and competitive?
Consider the case one of the most globally iconic brands — Kodak. Founded by George Eastman in 1880, Kodak rapidly became a pioneering company, changing the world of photography and color film production. After a century, in 1980, Kodak’s annual sales were above $10 billion, with profit margins of around 80 percent. Kodak enjoyed an enviable brand, and leadership in the industry, but it also had the bottom-line figures to continue its dominance. But starting around 2003, the brand slowly but surely began to slide. In the last decade, Kodak closed 13 manufacturing units, 130 processing laboratories, laid off more than 47,000 workers and on Jan. 19, 2012, filed for bankruptcy.
Building successful brands is extremely challenging, and it is no surprise that companies, consultants and business media almost exclusively focus on brand-building strategies and tactics. However, ever-changing technology, more than any other factor, has made the positions of iconic brands less secure than ever. Decades of leadership positions and the advantages that come with incumbency get totally wiped away if companies do not take note of the emerging changes and effectively respond to them. Thus, it is important to know what factors lead to the erosion of an iconic brand’s longstanding equity, and what steps CEOs and brand managers can take to avoid such a scenario.
Overcome the liabilities of entrenchment: One of the biggest challenges that companies face, especially old companies that have their set ways of functioning, is one of overcoming the shortcomings of entrenchment. As companies grow and thrive, the top leadership is bound to believe that what allowed them to reach the position of leadership will also allow them to retain that position. This is one of the biggest myths.
When IBM started to falter in the mid-1990s, one of the biggest moves it made was to restructure the firm as a services company. Similarly, iconic brands should carry out a complete overhaul of their core competencies to evaluate whether they align with the changing conditions. They should be aggressive about making changes, even if it goes against entrenched practices.
Be proactive in foreseeing the upcoming changes: The curse of success is that it lets brands become complacent. By resting on their laurels, iconic brands let the competition and emerging technological changes blindside them. Instead, iconic brands should create procedures and instill processes that let them foresee potential changes and be proactive in embracing them and changing their strategies accordingly.
Focus on innovation but also commercialization: The conventional wisdom is that companies that invest in innovation win the business battle. However, it is important to realize that the innovation of ideas, business models and products is just part of the equation. Kodak was one of the first to think about digital photography. Kodak engineer Steven Sasson was behind the technology of digital photography way back in 1975. However, Kodak failed to successfully commercialize the technology. A few decades later, it was the digital revolution that killed Kodak. It is important that iconic brands focus on innovation and the successful commercialization of their innovative ideas.
Martin Roll is a global business and brand strategist. His Web site is at www.martinroll.com.