Business Blog Book Tour: The Origin of Brands

For the fifth Business Blog Book Tour, I had the opportunity to ask Laura Ries a few questions about her new book, The Origin of Brands, which she co-authored with her business partner and father, Al Ries. The book offers an interesting look at how brands evolve and thrive from divergence (as opposed to convergence). Here is my Q&A with Laura:

DP: Big companies like Kodak and Polaroid face very unique problems in that their entire business models (namely camera film) are withering away. Kodak’s answer has been to enter the digital photography space under the Kodak name, but as you point-out in your book, they are late to the game and not a name people associate with great cameras (or digital photography or electronics), only great film. The suggestion you make in your book is that companies not use their established brand names to launch new brands or categories, but companies like Kodak have so much equity in their names. What is a company like Kodak to do when they have a name they have spend years and hundreds of millions of dollars to build, only to now have it’s core association (film) relatively decimated and its new association (digital photography) not clicking with consumers?

LR: I should point out that Kodak invented the digital camera. When you put an existing name on a new category of product, you are bound to wind up a loser.

You need the courage to use a new name. Should Toyota have called its luxury car, the Toyota Supreme? I think not. Lexus is a much better name.

Sony most profitable product is not called Sony, it’s called PlayStation.

DP: You say mega-brands, like Virgin, are rarely effective because they put every product line (i.e. Virgin Atlantic, Virgin Mobile, Virgin Mega, etc.) under the main brand name as opposed to a brand like Tide that is solely associate with laundry detergent. Virgin however, as a whole, has been effective (with some exceptions, of course) and I’m curious what it is about that company that makes it unique in that regard? That’s not to say that Virgin’s methods are advisable for the marketplace as a whole, but what can we learn from what Virgin has accomplished?

LR: Very little. Just because Virgin is successful doesn’t necessarily mean that your company can be successful with a similar strategy. There are some fundamental reasons for Virgin’s success starting with Virgin Atlantic, an airline that enjoys monopoly status (along with British Airways) at Heathrow airport outside of London. With enough “slots” at Heathrow, any airline can be successful.

The truth is that most companies that brand everything with the corporate name are not successful. (GE is another exception.)

DP: In the book you use the Segway as an example of effectively using PR to generate buzz for a new brand. The product was leaked on the Internet, was formally introduced on Good Morning America and was featured on evening new shows and in national newspapers. Despite all that however, the Segway has failed to take off. The price point ($3000 – $4500 at last check) is pretty steep for most people and it’s everyday uses are somewhat limited. Commercial sales (for use in warehouses, etc.) seem to be a bit stronger, but still nothing like what the initial fanfare led us to expect. Considering that, what caution do you give to those who have a “cool” concept and can generate buzz about it, but may be missing other key components to success?

LR: You should read one of our previous books, Focus. Segway generated a lot of publicity with their launch of the product and then they made a mess of their marketing by trying to be all things to all people.

We would have started with one market and then moved on to other markets after the first one was successful. Our suggestion: country clubs. Use the Segway as a replacement for golf cards.

DP: In the book, you use Rock/Paper/Scissors as a model for how the opposite strategy to that of your opponent (or competition) is often the best strategy. You discuss how emulating a leader is dangerous because they will still be perceived as the leader and a better strategy is to go for second place with the opposite strategy (what you call Survival of the Secondest). In fact, in the book you say, “‘That’s not the way it’s done’ is usually a good indication that an idea has merit. Don’t ask, does the idea make sense? Ask whether the idea is the opposite of the leader’s strategy.” It would seem though that ‘opposite’ doesn’t necessarily equal ‘good’ or ‘better.’ The risk is that the leader may have truly found the best way and the opposite could backfire. What insight can you offer about the risks of doing the opposite?

LR: In theory, you’re right, but in practice, it almost never works that way. Charles Darwin said “Nature favors the extremes.” Elephants and mice, for example.

Our research shows that there is never only one way to do anything. Wal-Mart and Sacks Fifth Avenue are both successful, but Sears is getting crushed in the mushy middle.