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Today is the last day of life for Circuit City. The bankrupt company announced it will close the last of its stores this evening. Thus ends the tragic tale of a company that in 2001 was cited in Jim Collins’ book Good to Great as one of the best-run American businesses. As with most corporate failures, the seeds of Circuit City’s destruction were sown long ago.

One of the first signs of trouble came with the decision to abandon the core business as the principal driver of growth. A determination was made by management to look elsewhere for innovation. The result was the launch of CarMax, a used-car chain. At the time, Circuit City was the largest consumer electronics company in the world. Archrival Best Buy wasted no time in exploiting the distraction, overtaking Circuit City and never looking back.

Circuit City was further distracted by the launch of DIVX. The technology platform was developed to compete with DVDs, but famously failed, costing the company over $100 million. By the time Circuit City jettisoned CarMax and exterminated DIVX, Best Buy had become the strong front-runner in the race.

Refocused on its core business, Circuit City began to explore ways to improve the store experience and revive the brand. But on March 28, 2007, the company shot itself in the foot by firing over 3,000 experienced employees to replace them with lower-priced staff.  The move famously backfired as the quality of customer service and employee morale sunk to new lows. Employees never again trusted management and consumers lost patience with the brand. The company continued to plummet, but the free fall ends today.

What lessons can we take from this brand fatality? Circuit City and Best Buy operated with similar product lines, prices and locations. But Best Buy took care of its employees, consumers and its brand – Circuit City didn’t. And the rest is history.

References:

From Good to Great to Bankruptcy: Jim Collins’ book revisited

Learning from Circuit City’s Mistakes

Fortune Most Admired Companies

Fortune Most Admired Companies

Spend much time reading today’s headlines and you’ll get the impression that big businesses are just decaying hulks of greed and corruption. But a new article in Fortune reminds us that many corporations are not only surviving, but earning the admiration of their peers.

The list of the world’s most admired companies includes innovative consumer brands like Disney, Apple, Google and Southwest Airlines, along with respected holding companies like Berkshire Hathaway and Procter & Gamble. Skim through the top 50 and you’ll be reminded there are still leaders in this world.

Brand-builders should note there are two key qualities exhibited by most of the companies on the list: The vision to avoid the crowd and the wisdom to build long-term stability. As always, individuality and predictability are the building blocks for great brands.

The Top 20:

1    Apple
2    Berkshire Hathaway
3    Toyota Motor
4    Google
5    Johnson & Johnson
6    Procter & Gamble
7*    FedEx
7*    Southwest Airlines
9    General Electric
10    Microsoft
11    Wal-Mart Stores
12    Coca-Cola
13    Walt Disney
14    Wells Fargo
15    Goldman Sachs Group
16    McDonald’s
17    IBM
18    3M
19    Target
20    J.P. Morgan Chase

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Hyundai Assurance Program

I can’t think of a major American corporation that doesn’t have one or more employees whose responsibility it is to gather consumer insights. So why are so few brands truly insightful about consumers in this turbulent economy?

It doesn’t take a rocket scientist to know that consumers are worried about the economy. Most studies like the Rasmussen Consumer Index show consumer confidence at a record low. But can you name any brands that are standing up to do something about it? Not many.

An example is Hyundai, which is responding to consumer anxiety by offering to let purchasers of new vehicles out of their contract if they lose their jobs. A great idea that seemed destined to be followed by other automakers, but the U.S. automakers have all been too busy lobbying for their own aid to think about lending a hand to their customers.

American Business seems to have adopted a victim mentality preferring to whine about circumstances beyond its control rather than demonstrate conviction and leadership despite adverse conditions.

Is there any reason Ford can’t announce a move to bring a percentage of its manufacturing back to the U.S., creating more jobs and stimulating the economy? What about Nike, or Target, or Dell, or P&G? Instead of eliminating hiring, what if they announced plans to reduce outsourcing so they could increase domestic hiring. Imagine how consumers would feel about a brand that demonstrated that kind of leadership!

Concern for internal issues shouldn’t keep corporations from turning some of their attention to brainstorming ways to help their customers and the economy. This is a time for decisive private action and those who participate in the solution will find themselves on top when prosperity returns.

Addendum: David Hartman, designer of the VCU Brandcenter’s logo and other works of graceful creativity, pointed out that Intel is bucking the victim trend by increasing its investment in the U.S. You can read about it here.

Sam Walton's 1993 Autobiography

Sam Walton's 1993 Autobiography

The folks at Walmart have been working hard to improve their image of late. They’ve pumped up their public relations, hooked up with environmental advocates and launched appealing new ads with the help of The Martin Agency. The work is beginning to take hold, but as the deepening economic crisis casts shadows on the U.S. economy, Walmart may have an opportunity to take a giant leap forward with their brand. 

Imagine if Walmart announced a decision to work with its manufacturers to move 20% of their production back to the U.S. within five years. It would be a private economic stimulus that would have a huge impact on the economy and the brand.

Walmart would have no problem arranging a press conference with President Obama – the press would be filled with quotes from grateful consumers – and the actions might inspire companies like Target and Home Depot to follow suit. Goods sold under the program could be showcased under “Made in the USA” signs. And while consumers might pay slightly more for these products, they’d be contributing to bringing jobs back to their hometowns.

Walmart’s significant economic power could really make a difference in increasing employment and jump-starting a recovery, which would lead to stronger sales and a higher stock price. Think of it as a virtuous cycle that results in passionate admiration of the brand.

Am I dreaming the impossible dream? Maybe, but Walmart is working hard to reclaim the legacy created by Sam Walton, a man who titled his autobiography “Made in America.” In his time, Walton encouraged his company to buy domestically made goods and consumers rewarded the company for it. What a powerful statement it would make for the brand to signal its commitment to the consumers who buy its goods, by buying theirs.

 

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Google's Robert Wong and VCU Brandcenter's Rick Boyko

Last week the folks at Google brought a small army of trainers and a truckload of technology to the VCU Brandcenter as part of their Google Campus program.

In the early morning hours, workers started unloading trucks containing loads of interactive kiosks, touchscreen monitors and – just as essential for attracting the attention of graduate students – buckets of candy and snacks. By the time students started trickling in, they encountered about 30 Google employees, and the Brandcenter had been transformed into the Googleplex for a day.

The students and faculty were treated to in-depth discussions of a wide range of technology from Google Analytics and AdWords to new features in YouTube and GPS applications tied to Google Android and Google Maps. For the Brandcenter’s 200 students and faculty, it provided great exposure to new methods of engaging consumers in an increasingly digital world. And for Google, it was a smart investment aimed at influencing the influencers who will help to shape the future of brand building.

Richmond advertising firm The Martin Agency co-sponsored the event and many of their leaders attended – I ran into Mike Hughes, John Adams, Bruce Kelley, Matt Williams, Steve Bassett and others. Robert Wong, Creative Director at Google Creative Labs, gave a fascinating talk that covered a variety of creative topics and demonstrated some of the ways Google tries to live up to its “Don’t be Evil” motto.

In all, it was an outstanding event that provoked ongoing conversations about shaping brands in a connected culture.

stick it to the manIntroduction

A few weeks ago, a brilliant marketer and former colleague of mine, Dee Papit, commented on my article about the “Branding of Barack Obama.” Her reference to Obama’s use of the Internet and social networking led me to reflect on the way he and libertarian candidate Ron Paul bypassed the smoke-filled rooms of power to connect directly with supporters. I thought I’d share a few of my thoughts on the cultural evolution that made these events possible and continues to reshape competition in the new century.

The Seeds of Change

In 1960, Ford didn’t need a better idea. They had manufacturing capacity, supply chain efficiency and a distribution network. The investment required to build this kind of capacity was an enormous competitive barrier and it successfully choked off the efforts of all but three of the world’s most powerful companies. By a wide margin, General Motors was the largest company in the world and industrial powerhouses like Ford, Chrysler, General Electric and U.S. Steel were all in the top 10.

It was an age of consolidated power. Three networks controlled all television programming. A handful of Hollywood moguls controlled mainstream film. IBM controlled 70 percent of the computer market, and the only phone service you could buy came from AT&T. In the ’60s, the scale that such companies operated on made it nearly impossible for smaller companies to compete. Fortunately, the ’60s also laid the groundwork for all this to change.

The rebellion by young people in the 1960s, punctuated by the popular slogan “Power to the people,” didn’t disrupt established power bases overnight, but it did establish a pattern of independent thinking that led to the proliferation of entrepreneurship. As more young people questioned authority, we saw the rise of cultural classes that would begin to reshape our world at the end of the twentieth century. Most notable among these were the hippy, the artist and the geek.

Hippies and their ilk openly questioned the motives of big business, big politics and anything that came out of an assembly plant. Their back-to-nature message set the stage for the rapid rise of the organic movement, but it also coincided with the spread of the creative class.

In the ’60s, the creative community came alive with writers like Jack Kerouac, Allen Ginsberg, Maya Angelou, Ken Kesey, Gloria Steinem, Truman Capote and Harper Lee; musicians like Miles Davis, Herbie Hancock, The Velvet Underground, Jimmy Hendrix, Bob Dylan and Neil Young; and artists like Andy Warhol and Robert Rauschenberg. These influences worked their way into film and television. They also inspired advertising leaders like Bill Bernbach to usher in the era known as the “Creative Revolution.”

At the same time creativity was on the rise, the growth of technology was accelerating, sparking new innovations in the ways people worked and communicated. “Geeks,” a derogatory term for social outcasts who tinkered with technology, would soon become a badge of honor as young geniuses like Steve Wozniak, Steve Jobs, Adam Osborne, John Draper and Bill Gates turned their parents’ garages into the primordial pool of the evolution of technology. This growing subculture of basement businessmen was greatly influenced by social activists like Fred Moore, cofounder of the Homebrew Computer Club. In the 1970s and beyond, Moore and others around him pushed for the democratization of technology. This led to an increased number of these garage geeks breaking away from corporate confines to start their own, venture-backed businesses.

Throughout the ’60s, ’70s and ’80s, anti-establishment attitudes, increased emphasis on creativity and expanded democratization of technology provided fertile conditions for the incubation of changes that were to erupt onto the scene in the late 1990s. The rocket fuel that propelled the final stage of transformation was the Internet.

Ironically, the Internet was born out of the US Department of Defense in the 1960s. It was originally known as the ARPANET and developed through the ’70s and ’80s, but it wasn’t until the launch of the Mosaic browser in 1993 and Netscape in 1994 that the “Information Superhighway,” as it was called, came into popular use.

In the latter half of the 1990s, the Internet would go from a largely unknown plaything of geeks, phreaks and researchers to a middle-class mainstay. With this change, virtually any individual or business had an equal shot at capturing the attention of a global audience. While the dot-com bust in 2000 purged the new economy of many of its weakest businesses, the transformation of the economy continued, altering the landscape, weakening large institutions and emboldening challenges to the status quo.

Aided by technology and a strong will to break away from mainstream institutions, independent enterprise has flourished. The Sundance Festival launched the era of the independent filmmaker, while cable access broke down the dominance of the Big Three Networks. AT&T’s breakup led to the vast expansion of communications options, including the development of mobile telephony, texting and smart phones. IBM’s dominance in computers gave way to dozens of new companies, like Apple, Microsoft, Oracle, HP and Dell. Electronic publishing, paired with distribution through online retailers like Amazon.com, would allow any author to bypass the major publishing companies and self-publish their book. And thousands of innovative new businesses, from eBay to Google, would change the nature of the way we trade and promote goods and services, democratizing access to online markets and advertising.

So where does all this lead? It is bringing us to a time when anyone with an innovative idea and the conviction to pursue it can compete in a global marketplace. We are seeing small branding boutiques pull choice assignments away from global giants. Multinational banks are crumbling, even as small community banks thrive. And political candidates like Ron Paul and Barack Obama are able to raise millions of dollars from small donors, while bypassing the traditional paths to power.

Only time will tell what lies next along this path, but it is certain to lead to greater diversity of opportunity and unprecedented competitive freedom.

newyesforstore

I’m often wary of reading business books, especially books relating to branding and marketing. Most are shallow and repetitive, squeezing 200 pages out of a concept that was better told on the back cover. 

So I picked up the unfortunately-titled “Yes!” with a great deal of apprehension. But I was wrong to judge this book by its cover. Though it may look like a self-help book or a new audio CD from Tony Robbins, “Yes!” is a well researched and succinctly written exploration of the art of persuasion. The authors, Noah J. Goldstein, Steve J. Martin and Robert B. Cialindi, explore a wide range of methods for influencing audiences. 

If you’re in the business of encouraging people to do things, as all marketers are, you will find this book to be very useful. Buy it at Amazon.com.

goodbye-george

Dr. Martin Luther King, Jr in Grosse Pointe

Dr. Martin Luther King, Jr in Grosse Pointe

I was seven years old on March 14, 1968, when the Reverend Martin Luther King, Jr. came to my hometown. As I sat in my living room, Dr. King drove to Grosse Pointe High School with the police chief in his lap. When the chief heard the car might be shot at on the way to the speech, he insisted on sitting on the reverend’s lap to protect him. [Why don’t any of the articles about this event mention his name? A guardian angel in a long black Ford.]

At the high school, protesters surrounded the building and hecklers frequently interrupted the speech. Dr. King said later that, “ [it was] the worst heckling I have ever encountered in all my travels.” A number of people, however, welcomed the Reverend with enthusiasm. Dr. King received an ovation several minutes long when he entered the hall and the audience interrupted his speech not only with jeers, but with applause – a reported 32 times.

Reading about the event as an adult, I’m saddened, but not entirely ashamed of my neighbors. It was members of the Grosse Pointe Human Relations Council who invited Dr. King to speak. They were part of a growing movement of local residents who were committed to racial equality.

I realize now that I was one of the lucky ones. My father was active in city politics, where he worked for civil rights with the Access to Justice campaign and helped elect the first black mayor of Detroit. It wasn’t until much later in my life that I came to understand the significance of that day and the events that surrounded it. I think about how far we have come and how far we still have to go.

(see comment for an update)

For more information:

http://www.shelbyuticanews.com/Homepage-Articles/2007/01-17-07/GF-MLK.asp

http://www.tbwt.org/index.php?option=content&task=view&id=88&Itemid=41

http://www.gphistorical.org/mlk/index.htm

http://www.associatedcontent.com/article/149555/when_martin_luther_king_jr_rode_to.html?cat=8

Transcript: Dr. Martin Luther King, Jr. Grosse Pointe Speech

Steve Jobs Apple

This week brought a handful of media calls asking about brands in the news. “Does Super Bowl advertising make economic sense?” “How can Detroit Automakers restore their brand?” “How will Steve Jobs’ leave of absence to address a serious illness affect Apple’s Brand?”

That last one got to me. A human being says he is too sick to work, and all the media can ask about is what the affect will be on the stock price.

Steve Jobs gave birth to Apple in 1976 and restored it from near-certain death in 1987. He requested no salary upon his return and held no Apple stock. He didn’t do it for economic gain. He was crazy enough to think he could change the world – and he did. 

He revolutionized the computer industry, the music industry, the phone industry and the animated movie industry. He brought tools for creativity to everyone, with software for editing video and photography, words and music. He built marketplaces where musicians and programmers could bypass intermediaries to sell their work.  Along the way, he built a small army of brilliant and creative thinkers who go to work every day thinking differently. 

So for a little while, this army will carry the torch – as they should. They will let Steve Jobs rest and recover – as we should.

Be well Mr. Jobs. We wish you the power to be your best.

Muhammad Ali and Jane Goodall
Muhammad Ali and Jane Goodall
In 2003, Muhammad Ali and Jane Goodall sat side by side to answer questions at the United Nations Peace Day celebration. Both were named Messengers of Peace, and both continue to inspire others to make the world a better place. It is a great honor that VCU Brandcenter students are working with the Jane Goodall Institute and the Muhammad Ali Center this semester.

My Advanced Brand Management students are preparing strategies for expanding the reach of the Jane Goodall Institute Brand, while my Cultural Exploration students are developing creative campaigns that connect people with the message of the Muhammad Ali Center. Executives from both organizations will be traveling to Richmond in the coming weeks to participate in the final presentations of the work.

Years ago, Jelly Helm positioned the VCU Brandcenter (formerly the Adcenter) with the phrase, “We’re not out to save the world. Just Advertising.” But in these turbulent times, teaching advertising students to use their gifts to help save the world may not be such a bad idea.

Different Thinkers Ali and Goodall

Different Thinkers Ali and Goodall

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Painting by the River

After all the heightened emotions experienced in the final days of the presidential election, it was wonderful to slow down and enjoy the great outdoors with an art exhibition along the river. Five artists were featured in the show hosted by Lazare Gallery. A handful of students and chatted with the artists as they worked, then ducked inside for wine and cheese and more art. It was an enriching way to spend the afternoon.

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Inside Lazare Gallery

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Aaron Pavelis Completes A Portrait

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Ronald Renmark Captures A Landscape

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According to published reports, Barack Obama’s victory in the Presidential election was celebrated around the world. Here in Richmond, Virginia, the former capital of the confederacy, election night took on powerful symbolism as supporters encircled the statue of Robert E. Lee with Obama signs.

But what led to this historic outcome? The sharp contrast between the campaigns of John McCain and Barack Obama provide a lesson in the fundamental nature of brands.

Brands are not the product of logos, slogans or jingles. They are built through consistent, predictable behavior. This predictability provides consumers with a reference point for the brand. They come to expect a consistent experience that gives them confidence that future experiences will be equally positive. When companies behave unpredictably, they imperil their brand. 

So which campaign was more consistent and predictable? Barack Obama’s team never wavered from the calm, pragmatic optimism that characterized its communications. Contrast this with McCain’s campaign, which seemed to leap from one opportunistic message to another. His team abruptly halted the campaign, and then hastily restarted it. They drifted from Bill Ayers, to Joe the Plumber, to celebrities to socialism. It felt like we were all sitting in a focus group as their campaign staff asked us “how about this one? No? How about that one?”

Another major failing of the McCain campaign was their focus on the competition. Look at the TV ad section of their website (below) and you’ll notice the face on most of McCain’s ads is Obama’s. It’s hard to build a brand while constantly invoking other brands. Consumers want to know your story, not the other guy’s. What were his campaign managers thinking when the chose to bypass McCain’s own accomplishments to latch onto the dubious saga of a tax-delinquent plumber?

Great brands become great, not by skipping from place to place in an attempt to pander to consumer whims. They act with conviction and they communicate with clarity and consistency. Ask yourself which candidate best fits that description and I don’t think you’ll have any trouble picking the winner.

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McCain ads from his campaign website

 

I wasn’t sure how thrilled my graduate advertising students would be to spend their Friday night at the Virginia Opera. It’s not as though Giuseppe Verdi is really on most of their iPod playlists. But as we got closer to last Friday’s opening, I started to get more and more emails asking for extra tickets to bring friends. I even heard from students in other classes asking if I could adopt them for a night. So on Friday, I walked into Richmond’s Landmark Theatre with 50 well-dressed VCU Brandcenter students to see Verdi’s Il Trovatore. I won’t attempt to run through the entire plot here, but the characters in the story had some big problems. “Oops! I threw the wrong baby into the fire” is not a line I’ve seen in a lot of movies.

Our crew emerged about 3 hours later. Other than an agonizingly long scene of death by suicide and some comical translations on the supertitles, it was a wonderful evening and quite a contrast from our trip to Southside Speedway.

Special thanks to opera-lover, Jeannie Baliles, for inspiring this trip and helping arrange the group tickets and, Raquel Gimenez, for the photographs above.

Mentioned in General Colin Powell's "Meet the Press" interview today.