Author of "This Is Rage" and "Endless Encores"

How Fragile Is a Brand?

By on Oct 28, 2013 in Blog | 0 comments

Philip W. Schiller, Senior Vice President of worldwide marketing at Apple Inc introduces the new iPads in San FranciscoApple unveiled a bunch of new products last week, including numerous options in shape, size, and price point for a fuller line of iPads.  Many of these products are desirable and will make great holiday gifts, but none comes close to pioneering a new category of experience.  These are known as brand extensions, variations on a theme for already desirable existing successes.  It’s good stuff, and good business, but not much to get excited about — nothing like the first Mac, the first iPod, the first iPhone, and the first iPad, all of which constituted innovations that created category-defining icons.

Steve Jobs used to talk a lot about brand deposits and brand withdrawals.  A brand deposit takes place when a company invests heavily in making an indelible mark with customers, akin to their very first experience with a point-and-click computer, or a sleek digital music player, or an easy-to-use smart phone, or an intuitive tablet.  Brand withdrawals are usually harvesting activities, like brand extensions, where a company takes some money off the table without over-investing to get it.  Extremely short upgrade cycles for modest improvements in a device or high margin accessories like a carrying case are notable examples of brand withdrawals.  Steve would say you have to maintain a balancing act to infuse a brand with life and a company with cash.  I don’t think I ever met anyone better at this balancing act than he was.

That’s why I am starting to feel some heartache for Apple.  I am seeing a lot of withdrawals and not a lot of deposits.  I am also starting to see sloppiness as an acceptable norm, rocky roads that get paved over later without heavily pushing the envelope to warrant the annoyance.

Recently I posed the following question on my Facebook page regarding Apple’s release of the highly touted iOS7:

Is it just me or is iOS7 woefully slow, bloated, and unstable on older devices, particularly on the iPad2? My hour-to-hour experience on my beloved tablet has gone from impossibly perfect to mediocre. Is this the same Apple?

The response was mind-blowing.  Here’s an extract from the thread, names removed to protect the honest:

  • I’m not having any problem with it except for user error with new features. I do see some slowness trying to connect to the internet but I assumed it was my wi-fi.
  • ME: I don’t think so because I am having the problem with wi-fi wherever I log in, it’s just sluggish, and apps that worked fine before crash at least once a day, and gasp, I have to reboot!
  • That’s not good. Wifi is definitely a problem. Apps don’t usually crash unless I stress them by doing things too fast. You have to reboot the device as opposed to relaunching the app?
  • ME: After a few apps crash it freezes, just like MSFT.
  • Ken, I am having the same problem on my iPhone 4S and MacBook. I regularly close apps on my phone, but that just saves battery life. It doesn’t help with speed.
  • Yep apple has confirmed with me that new software doesn’t perform well on old devices. Happen to me when I owned the iPhone 4.
  • It’s also bloated and annoying on newer devices as well.
  • 4S is now super unstable.
  • ME: Yep, no question that the loss of Steve Jobs is hardly being felt in Cupertino. Brand is in hunky-dory hands.
  • My wife hates it… I won’t upgrade….
  • try running it on an iPhone 4. I hate it.
  • Slow and crashes. I’m running it on an iPhone 4S and an IPad 2. Shame. Shame.
  • ME: Wow, I don’t think I’ve seen this much negative love toward Apple other than at a MSFT conference. I wonder if they know. Maybe I should extract these comments into a blog post to help them understand. But would they care? That’s the real question. If they did, they probably already would have done something about it.

Brands are not invincible.  They don’t fly with a safety net.  Customer loyalty has to be won anew at every touchpoint.  No company is safe from creative destruction, not even Apple.  That is why the average life of an enterprise company today is about half as long as a human life, around 40 years.

And you thought your own 40th birthday guiding you into middle age was scary, huh?

In my view, Apple remains a legendary company with three key competitive advantages at the moment:

  1. Brand: One of the most magnificent consumer brands of our time, expertly polished and full of lustre.
  2. People: An almost incomparable assembly of talent in its employment to create, innovate, Think Different, and change the world
  3. Cash: An unfathomable amount of reserves to invest as it deems wise and appropriate.

If they don’t protect the brand, the other two won’t matter in the long run.  While historic odds of longevity are no more on Apple’s side than any other modern corporation, the good news is that Apple has built up tremendous goodwill with customers and shareholders to ignite the future, and I would venture to guess they will protect their brand, but not without a lot of pain in the reinvention.  That’s perhaps the biggest problem of being at the top of the top, and why it is so easy to fall.  When customer expectations are at the level where Apple sets the bar, you have no choice but to outperform yourself time and again.  That’s an outrageous challenge.

Brands seldom shatter all at once.  It’s the little hairline fractures that get you.  Those are waved off as no big deal, normal ebb and flow in business.  Then a hairline fracture becomes a crack, and the crack ripples outward like a spider web, and then the ceramic whole flies apart.  Andy Grove calls it the Strategic Inflection Point, the change in market forces that happens and you miss it, and then it’s too late to course correct.  You can remainder, but you seldom get back to the top of the heap.

That’s because a brand is not a logo, it’s a promise.  And just like when a friend breaks a promise to you, you seldom fully forgive that person or fully trust them again.  Apple has always promised us humanity above technology, so when they even mildly violate that promise we feel it, because we have come to trust them so much. When a promise goes undelivered or long delayed, like a next-generation product leaked to the public zeitgeist, word of mouth can be savage.  Will we give them another chance on a bad release of iTunes or a map app?  On a rough system upgrade?  Of course we will.  Until the promise is broken one time too many, and then we won’t.

Business leadership is managing part for today, part for tomorrow.  It’s a plate spinning combination of the big picture and the small details.  Mostly it’s about listening to customers and loving your brand more than they do, protecting that promise with every resource at your command.  It’s very, very hard to do consistently, which is why the financial rewards are so immense when you get it right.

Curiously, the Facebook thread I extracted above went on a bit longer, and eventually someone pointed me to an online forum where I was directed to adjust a network setting and reboot.  From there things got a little better, but not entirely.  It was then suggested that I do a clean firmware install, which was way beyond my alloted time block for bettering the tool I needed to do my work — remember, these devices aren’t your work, they are the means to do your work.  We migrated to Apple devices precisely because competitors put us through the ropes with reinstalls, adjustments, and tip on settings that experts could swap.  Apple won the last few rounds because you didn’t have to be an expert at anything, you just opened the box and it worked.  That was a wow, and it was always worth the premium price to those who wished to pay it.  There were a lot of us!

Don’t break your promise.  Sweat the small stuff.  Love your brand.  Love your customers.

Filed under: Brand, Business, Innovation Tagged: brand deposit, brand withdrawal, customer loyalty, Steve Jobs, sweat the small stuff, Think Different, zeitgeist
Source: Corporate Intelligence

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