Fear factor


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Fear Factor is my piece of work i have done as thesis on berlin school of creative leadership in 2009 about brands and their fear to differentiate. Majority of brands today are mediocre, lacking clear diferentiation. What the hell is hapening? My hypotesis is that the ultimate reason is fear from differention - the fear factor, that lets this happen. read on...or go to www.fearfaktor.com

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Fear factor

  1. 1. Fear Factor Master’s Thesis FEAR FACTOR Fear to Differentiate Lucia Tarbajovská 1
  2. 2. Fear Factor 2
  3. 3. Fear Factor Master’s Thesis FEAR FACTOR Fear to Differentiate Lucia Tarbajovská Master of Business Administration Creative Leadership Class of 2008 - 2009 1. Supervising Tutor: Dough Guthrie 2. 2.Supervsing Tutor: David Slocum 3
  4. 4. Fear Factor Statement of Authorship: This dissertation is the result of my own work. Material from the published or unpublished work of others, which is referred to in the dissertation, is credited to the author in the text. Prague, 06.06.2009 Lucia Tarbajovská 4
  5. 5. Fear Factor The oldest and strongest emotion of mankind is fear. HOWARD PHILLIPS LOVECRAFT 5
  6. 6. Fear Factor Shadows Shadows are the shy souls Of what matters to sun The walks of slow move Pretention in the trees And those who worry Those who loathe novelty Those who find richness in familiar Dare not to find pleasure in them To them fear is the master 26th June 2009, Lucia Tarbajovska Note: As I was researching the Fear Factor, I wrote a poem that is relevant to the same topic. I thought I include it here to open the paper in a poetic way. 6
  7. 7. Fear Factor Contents List of illustrations & tables 9 List of abbreviations 10 Inspiration to write this thesis 11 Hypothesis 12 - 13 Understanding fear factor 13 - 42 Quotes 13 Fear defined 14 Scientific context 15 Smell of fear 15 - 17 Fear of novelty 17 Fearless leaders 17 - 20 Safe decisions 20 - 22 Leadership is about overcoming fears 22 - 23 Courage 23 - 25 Differentiation 25 - 28 Mediocre brands 28 - 29 Leading suppliers and partners 29 - 30 Testing 30 - 32 KPI’s 33 Brand prostitutes 33 -35 Reactiveness to competition 35 Communication 35 - 37 Organizational culture 37 Organizational structure 38 - 39 Fear factor and financial crisis 39 - 42 Research 42 - 99 Methodology 42 Research findings - Qualitative research findings 44 - 78 - Quantitative research findings Appendix #2 Research analysis - Qualitative research analysis 44 - 77 7
  8. 8. Fear Factor - Quantitative research analysis 78 - 99 Conclusion & recommendations 105 - 109 10 freedoms from fear 109 Bibliography 112 - 113 Appendices Research questionnaire Research findings Beef magazine article Fear factor Note: When talking about creativity in this paper, I talk about being able to create something new, being able to innovate, and differentiation as such belongs under this as well – because differentiation is about new things, novelty, innovation, new ways, new directions, reinvention etc. 8
  9. 9. Fear Factor List of illustrations & tables Illustrations Skinner box, Nina Leen/Time-Life Pictures/Getty Images The smell of fear, iStockphoto/Joshua Blake Martin Luther King, http://www.writespirit.net Nelson Mandela, http://www.bbc.co.uk, Getty Images Aung Suu Kyi, http://pacificties.files.wordpress.com Steve Jobs, www.wikipedia.com Richard Branson, http://www.entrepreneursland.com 99 Fears, Nedko Solakov Analysis paralysis, Tom Fishburne, www.tomfishburne.com Sticker by Peter Saville, This is not a brothel, www.cpluv.com Four freedoms of DDB (www.ddb.com) Strategic vs. creative thinking, The Brand Gap, visual presentation of Marty Nemeier, Neutronllc Google home page, www.google.com Method multi-surface cleaner, www.methodhome.com Tables Best global brand 2008, Interbrand, www.interbrand.com 9
  10. 10. Fear Factor List of abbreviations IPO – Initial public offering ROI – Return on investment KPI’s – Key performance indicators ARPU – Average revenue per user EBITDA – Expenses before interest, taxes, depreciation and amortization OFCF – Operating free cash flow CAPEX – Capital expenses OPEX – Operating expenses MVNO – Mobile virtual network operator CFO – Chief financial officer NFC – Near field communications (mobile payments through mobile phones) 10
  11. 11. Fear Factor Inspiration to write this thesis During the past 10 years, I have been working for a number of corporations, to name a few – Globtel GSM (Orange Slovakia as of today), Samsung Gulf Electronics in the MENA region, Bang & Olufsen Middle East, Montblanc, Vodafone Czech Republic and T-Mobile Czech Republic. I have always worked in the area of marketing, whether it was brand, communications, retail or business development. I am fascinated by strong brands, well-positioned and differentiated brands. All brands reach a point in their growth when they start to loose out on their differentiation and become mediocre. They loose their courage and grow into fearful creatures. These are the symptoms for a vast majority of corporations. There are very few strong, clearly differentiated brands among such large organizations. I believe, this is due to fear to differentiate (the fear stemming from various reasons), which I call the FEAR FACTOR. This is what I aim to discuss in this paper. Paul Arden, author of the book “It’s not how good you are, it’s how good you want to be.” proposes this question: “Why do we strive for excellence, when mediocrity is required?” I absolutely agree, that a success of a brand is a reflection of their ambition. If you dream big, you fly high… My mission is to help organizations, brands to be different, stand out, be bold, to tell a unique story in their market. I am seeking some poetry or art in business. Not art for the sake of creating something different or shocking without a reason, but because I strongly believe each brand is a unique story with a unique character that you may fall in love with, even if they are not pretty. 11
  12. 12. Fear Factor Hypothesis There are many drivers of fear, but there is one important consequence of it. “Fear to differentiate is the primary driver of mediocrity for brands in the market. I feel there are a lot of average and mediocre brands out in the market today. There are a lot of drivers of fear that experience brands, but there is one ultimate consequence of it – fear to differentiate, fear to stand out from the mass. It seems, brands have lost guts and courage to stand out. They end up standing for nothing, which means people do not know why they should choose them. They do not stand for something crisp, edgy, well defined and that again means that customers do not know why they should choose them, what those brands are promising to them, and ultimately they become irrelevant to them. As Sir John Hegarty, CEO of BBH said in a Q&A session after his speech “10 reasons why is it good to be in advertising” in London, May 2009, the biggest fear for the agency is to become irrelevant. I believe lots of companies do not know who they are, what their clear vision is, what their brand story is, what their core values are, for whom their products are, who are the right people to work for them etc. If the basic isn’t fixed and defined – if the brand vision, positioning and personality are not fixed, it will show in every part of the organization – e.g. innovation, hiring, decision making etc. Of course it is not only about definitions in brand books and presentations, but more importantly it is in the everyday business, in the life of the company. Apple is a great example of a brand, which knows exactly who they are, what they stand for, what their brand story is, for whom their products are etc. This copy from “Think different” campaign of Apple Computer shows it beautifully: “Here's to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They're not fond of rules. And they have no respect for the status quo. You can praise them, disagree with them, quote them, disbelieve them, glorify or vilify them. About the only thing you can't do is ignore them. Because they change things. They invent. They imagine. They heal. They explore. They create. They inspire. They push the human race forward. Maybe they have to be crazy. How else can you stare at an empty canvas and see a work of art? Or sit in silence and hear a song that's never been written? Or gaze at a red planet and see a laboratory on wheels? We 12
  13. 13. Fear Factor make tools for these kinds of people. While some see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.” On the other hand, there are companies who don’t know this at all or have a slight idea of these basics – they do not know who they are, what they stand for... I remember one management group meeting discussion about importance of leadership in our company. I asked management what kind of leaders do they want us to be? I thought (and still think) we should be different than leaders of other companies. I would assume we should have different values than leaders of other companies. The management of the company was unable to answer my question at that time. What does this mean? If a company doesn’t know what kind of leaders they should have, what values they should have, this means they actually do not know whom to hire. Who are then the people such companies bring on board and expect them to win the game in the market? I believe differentiation needs courage, conviction, belief and passion. And companies which do not dare to differentiate, thinking they are there for everyone are there actually for no one in the same time. They want to connect with every potential customer, because there is revenue potential in them, but they end up being very generic and irrelevant. Of course differentiation isn’t a solution for everything. There are other elements to a success of a company. There are of course many cases when companies know who they are at the beginning, when they decide to establish their company, they know what they stand for and yet they get lost on their way, for example when a company is growing bigger (the bigger the company the bigger the responsibility and risk, when decision making is made in a collective consensus etc.) With globalization and current economic crisis, handling the Fear factor - fear to differentiation - becomes even more important. The world of sameness and mediocrity is readily available around the globe, accessible to everyone. Attention of consumers is won only by brands that are dramatically different. And the economic crisis adds to it because they are more careful about their expenses. 13
  14. 14. Fear Factor Understanding the fear factor Quotes To warm you up, I collected a few quotes from famous people, which I found interesting and relevant to the topic of Fear factor. There is a certain degree of satisfaction in having the courage to admit one's errors. It not only clears up the air of guilt and defensiveness, but often helps solve the problem created by the error. - Dale Carnegie Great spirits have always encountered violent opposition from mediocre minds. The mediocre mind is incapable of understanding the man who refuses to bow blindly to conventional prejudices and chooses instead to express his opinions courageously and honestly. - Albert Einstein Security is mostly a superstition. It does not exist in nature, nor do the children of men as a whole experience it. Avoiding danger is no safer in the long run than outright exposure. Life is either a daring adventure, or nothing. - Helen Keller I learned that courage was not the absence of fear, but the triumph over it. The brave man is not he who does not feel afraid, but he who conquers that fear. - Nelson Mandela We are taught to understand, correctly, that courage is not the absence of fear, but the capacity for action despite our fears. - John McCain Fear defined Wikipedia defines fear as an emotional response to threats and danger. It is a basic survival mechanism occurring in response to a specific stimulus, such as pain or the threat of pain. Psychologists John B. Watson, Robert Plutchik, and Paul Ekman have suggested that fear is one of a small set of basic or innate emotions. This set also includes such emotions as joy, sadness, and anger. Fear should be distinguished from the related emotional state of anxiety, which typically occurs without any external threat. Additionally, fear is related to the specific behaviors of escape and avoidance, whereas anxiety is the result of threats, which are perceived to be uncontrollable or unavoidable. 14
  15. 15. Fear Factor Scientific context Gregory Berns, M.D., Ph.D., from the Center for Neuropolicy at Emory University, made a parallel between work and Skinner box. He said that work is feeling more and more like a Skinner box today. Nina Leen/Time-Life Pictures — Getty Images The Skinner box was invented by experimental psychologist B. F. Skinner in 1950’s, to train laboratory rats to associate flashing lights and levers with rewards and punishment. If the light flashes green when the rat pushes the right button, it is rewarded with food. When the light flashes red, it is punished by electric shock. A rat can soon associate flashing lights with rewards and punishments. As he said, even though the workplace isn’t quite an electrified cage, he would prefer little kicks of electricity over the intermittent shocks of watching the blinking red arrows of the stock market or the jolts of continuous cutbacks done by businesses. Fear of punishment, as in the economic downturn, can alter humans’ decision-making. The smell of fear We often say, after we experience a difficult situation, that we could see it coming. We smelled something in the air. We knew something is going to happen. How many times have you seen a person thinking heavily about something, trying to solve a difficult situation, rubbing his or her nose? Many times, right? 15
  16. 16. Fear Factor iStockphoto/Joshua Blake Referring to an article I read online from Sarah Hewitt of University of Calgary, about the smell of fear, we not only scream or yell when we get into a dangerous situation, but we have other, more subtle ways how we show the fear. There are so called alert pheromones and in mammals they are linked with emergency behaviors such as freezing, attacking or scattering. A recent study from Julien Brechbühl, Magali Klaey and Marie Broillet from University of Lausanne, published in Science in August 2008, confirms the presence of such alarm center and alarm pheromones in the olfactory system of a mouse. Right at the tip of the nose, there is the so called Grueneberg ganglion that contains olfactory neurons with some specialized chemosensory functions. Using calcium imaging techniques and behavioral analyses, the investigators took the alert pheromones of one mouse and found out they respond to pheromones released from another mouse. In the behavioral experiments they disabled the neuronal projections in the Grueneberg ganglion. Normally, the alert pheromones would cause alert behavior such as freezing or so. But because the alert pheromones were not produced, the animals in experiment continued exploring without any sense of danger. ScienceDaily from March 2009, reports about many animals under threat releasing some kind f chemicals that functions as a warning signal for their species and those take action to avoid the danger Research by Rice University psychologist Denise Chen suggests a similar phenomenon occurs in humans. 16
  17. 17. Fear Factor So, perhaps, the tip of our nose really can signal danger and can help us deal with fear. Fear of novelty The first time a fox saw a lion, he was so terrified, he almost died of fright. When he saw him again, he was still afraid, but hid his fear. But when he met him the third time, he was so brave, he began to talk to him as though they were old friends. Familiarity breeds contempt. Aesop’s Fables, “The Fox and the Lion.” The evolutionary concepts of novelty and familiarity, discussed in the book of Glenn D. Walters, Beyond behavior, Construction of an overarching psychological theory of lifestyles, confirm that human infants are attracted to novel stimuli for the first months of their lives and later on, as they experience different stimuli, they start showing fear for the novel things and a growing preference of familiar things. This fear of novelty is then, under certain social circumstances - if they have a caregiver they are emotionally attached to, if they feel secure in their environment, if someone encourages them to explore the new etc., replaced again by a growing interest in novel stimuli as the child matures and makes sense of the world around them. I think it is very important to understand this interrelationship between fear, novelty and familiarity. This is something that goes with us throughout our private as well as business lives (for this paper the business life is the focus but the latter rests on the first) and we may find some important parallels and learning coming from our childhood and relationship to novelty in our business life – specially influencing our decision making and management of fear when venturing into new things such as differentiation. Fearless leaders Some people choose the road that is more difficult to take, with more traps and dangers on the way. Why wouldn’t they take the easier, far less dangerous one, if they can choose? There aren’t many of those in the history and even lesser in the business world. Is it because they never got anything easily in life and they do not believe something should fall into their arms just like that, or is that they can smell 17
  18. 18. Fear Factor the fear, the dangers in roads that seem to be invitingly easy to take and thus could be taken by everyone? Let’s take examples of few extraordinary fearless leaders from the history (from the Gordon Brown book of Courage, where he describes 8 portraits of outstanding leaders of the 20th century) and from business today. Martin Luther King, http://www.writespirit.net Martin Luther King – courageous leader in the African-American civil rights movement and today still frequently referenced as one of the most important human rights icons in the history. Most of us remember him thanks to his “I have a dream” speech that he delivered in 1963 in Washington and that raised public consciousness of the civil rights movement. This speech established him as one of the greatest orators in U.S. history. Nelson Mandela, http://www.bbc.co.uk, Getty Images 18
  19. 19. Fear Factor Nelson Mandela, the heroic leader of South Africa’s struggle to liberate itself from apartheid, he considers great courage over a long period against daunting odds. Aung Suu Kyi, http://pacificties.files.wordpress.com Life of Aung San Suu Kyi, who for 20 years – much of that time under house arrest in Rangoon – has led her country’s democratic opposition to military dictatorship, and continues to do so today. Jobs holding a MacBook Air at Macworld Conference & Expo 2008, source: wikipedia.com 19
  20. 20. Fear Factor Steve Jobs, the cofounder of Apple, finding a smart way back to Apple, actually bringing the company to its flourish and commercial peak. In 2007 he was listed as Fortune Magazine's Most Powerful Businessman and is considered to be the idiosyncratic, individualistic Silicon Valley entrepreneur. He goes on emphasizing the importance of design and aesthetics to the appeal of people. He strives for function and elegance, he shakes up old business models present in the market, he enters new categories... http://www.entrepreneursland.com Richard Branson is known for his opportunistic approach to business – he can sniff out great deals and opportunities and does not hesitate to explore them unlike others most probably would. He has the guts and no fear to venture into new things and therefore there was never before a single brand that has been so successfully distributed across such a diverse range of products and services. What does it take to take a tougher road? What does it take to be a fearless leader - a leader with guts in politics or in business – it doesn’t matter where? These qestions rise, as well as many others because there are as few courageous leaders as there are courageous brands in the market. So, are the leaders determinant of a bold brand that isn’t a victim of the fear to differentiate – the fear factor? I believe so. Safe decisions Today, most of the companies are led by CEO’s who have graduated from a good business school, they are masters of business administration. The name itself – business administration – says it – they are expected to administer the 20
  21. 21. Fear Factor business rather than creatively cultivate the business. And they are not administering it alone. Their right hands are the CFO’s and consultants. The business decisions made by leaders are mostly calculated, logical and therefore safe. Every decision rests on some kind of calculation – calculated business case, forecast of usage or spending pattern, tested revenue potential. Marty Neumeier describes this in his book the „Brand Gap“. He says that if there is no room for new and untried, therefore unsafe, there is no room for creativity, therefore no room for innovation. And therefore, from the point of view of this paper – there is no room for differentiation. In paradox, if you ask the same executives where they see future competitive advantage of their company, they will tell you that of course, it is in innovation. Something is wrong here, don’t you think? I never get the accountants in before I start up a business. It's done on gut feeling, especially if I can see that they are taking the mickey out of the consumer. - Richard Branson It all starts with a great new idea and a strong belief in it. A new idea is something that comes to your mind as a verse, as a methapor and only then you are trying to rationalize whether the idea will fly, fly today or only tomorrow or it won’t ever fly. If a leader is worried about an idea, it is good, it seems it is new, ground- breaking, it doesn‘t mean it needs testing by consumer who is unprepared, scared of something new, never thought of. New ideas need courage, need no fear, need openness to failure. And if you as a leader give no space for that by inviting and calling upon finance people and consultants, you might be locking yourself and your business to an already calculated equation, a linear system of thought and decision and end up not doing anything new. Vladas Griskevicius of the University of Minnesota and his colleagues, U.S. researchers say, that being afraid leads people to go along with the crowd, activating a "safety-in-numbers" psychology, compared to lust that motivates people to go alone. "Feeling scared or amorous can greatly change the way people make decisions," Griskevicius said in a statement. During an experiment they made, they had people watch a short clip from a frightening or a romantic film and then let them view commercials for making a 21
  22. 22. Fear Factor trip to Las Vegas. The ads used persuasive appeals either rooted in conformity such as "over a million sold" or rooted in uniqueness such as "stand out from the crowd." The study, published in the Journal of Marketing Research, found that after watching the scary clip, people were especially persuaded by conformity-based appeals that presented the trip as a popular option. In contrast, after people watched the romantic clip, they were not only less persuaded by the same conformity-based appeal, but such appeals were counter-persuasive. People in a romantic state were much more persuaded by appeals that presented the trip as a unique, unusual or exotic choice that others might not make. I’m not interested in building a boutique, but to have the courage to do what I think is right, as opposed to what I think will facilitate a good meeting. And I want to work with people that challenge what we do. I don’t think agencies challenge themselves as much. - David Droga Leadership is about overcoming fears Leadership is all about confronting fears and overcoming them. Furthermore, it is not only about overcoming their own fears but fears of people around them, all stakeholders - people they lead directly and the entire employee base, partners, suppliers, shareholders, public etc. And not only that, it is about overcoming the systems that we live in – the structures, the norms, the templates, the processes, the hierarchies, the rules, the guides etc. Since we are born, we are shaped by the system – parents, education, religion, sport, work (culture, process, hierarchy, media plan to name a few examples), law etc. We are trying to match the expectation defined by the process. We improve in that and we are rewarded for that. So why would we do something against that well built and perfected system? Why is advertising experiencing such crisis. Because we learnt how to do it the right way over the past 30 years and now we are unable to unlearn. And learn something new again? It seems the averege is a big trap in itself. Most leaders are under a constant pressure of fear of failure that ultimately locks them in a routine and pushes them to comfort zones, to consensus, to mediocre decisions. Very often, leaders are avoiding tough calls. It stems from a fear to make a wrong decision. This fear brings along other fears - What if the decision 22
  23. 23. Fear Factor causes losses? Will I lose my face in front of management, in front of employees, in front of my family and friends? Will I lose my position? Will i get my bonuses? Can I continue to pay mortgage? How can I maintain my current life style? Much of the messy advertising you see on television today is the product of committees. Committees can criticize advertisements, but they should never be allowed to create them. - David Ogilvy Leaders are exposed and they have to make decisions. But what we see very often is that they avoid decision-making. Whether they make decisions or not, whether their decisions are good or wrong, they stand exposed, their deeds are seen by everyone. I think, people can respect a leader that makes a wrong decision too. Personally, I would rather respect a leader that sometimes makes a wrong and radical decision. But I cannot stand a boss that sometimes makes mediocre or weak decision. Courage A business environment like this one requires managers to be courageous. I suggest taking it a step further by adopting courage as a key value of your organization and injecting it into your organizational culture. The courage to listen, act, make mistakes, admit failure – or rather promote it as learning, and most importantly stay the courage is essential to survival in times like these – the times of economic crisis and separates successful businesses from the rest in more stable times. At the World Effie Festival 2008 Sir John Hegarty, founder, chairman, and worldwide creative director for BBH, talked about irreverence and courage. “When I look at the history of advertising, and I look at the things that have sustained over time, they have had irreverence at their foundation, because they challenge. I think great communication is about challenging,” he says. “What irreverence offers us is a more stimulating way to create and capture people’s imagination and attention.” However, Hegarty warns, irreverence must be constructive. Not only must it lead people to question, but it must also create value. He points to Benetton’s shock advertising as having failed in that regard. “Yes, it shocked me to gain my attention - showing somebody dying of AIDS. It is profoundly irreverent, but, ultimately, I’m left feeling hollow … What are you saying and do you believe it? If not, your vision becomes empty and meaningless.” 23
  24. 24. Fear Factor Quoting from “Living the Brand”, brands have increasing difficulty in differentiating themselves. The only way they can create a realizable competitive advantage is by having a distinctive point of view. However stepping outside of the norms is highly risky. There is safety in being in the pack. Courage means confronting the anxiety that goes with difficult choices and then committing to the ideas that ensue.” If we look at the top brands in the brand value rankings, all the brands have been consistently courageous. Take Google with the 43% change in their brand value. What have they done? Those guys have been expanding, innovating, launching one new service after another (Google Mobile, Google Docs & Spreadsheets and Google Book Search, launch of G1 – the open platform Android mobile phone etc.). They are unquestionably the ruling king of the internet. Their innovation extends their role they play in customers’ lifestyles. They change the rules in many new businesses and industries such as telecommunications, media, or advertising, to name a few. And soon might overtake those and others. Are they afraid or shall other be? Best global brand 2008, Interbrand , www.interbrand.com In the Brand Gap, Marty Neumeier describes a zig-zag road of smart companies, companies that want to stand out and make a difference – very much depending on courage in their decision-making. It takes guts to be different. It is much easier to keep head down because it is more likely it will stay attached to the body. 24
  25. 25. Fear Factor Opposite to the would-be leaders, those who follow cannot be the leaders. Of course it is human nature to go with the group, to have approval of our peers, be in the familiar environment. However, creativity and differentiation require companies to abandon the learnt, the done before, the approved by social group, to leave the habit and the routine. On the other hand, it requires carving out new shape, space and direction. It is about the road not taken yet or never taken before. There is trick in this though. Because the measure of novelty in creativity or in differentiation is the fact that it scares the hell out of people. There are many companies, many brands that are so afraid to do anything that would stand out, they would not zig-zag their road in the market, they would chose linear road, easily read, easily followed, easily learnt, easily predictable. This is where Marty Neumeier sees the biggest gap – the gap between strategic thinking and creative thinking. vs. Strategic vs. creative thinking (The Brand Gap, visual presentation of Marty Neumeier, Neutronllc) Differentiation When buying a product, customers look first for something that is functional and relevant to their needs. Only then they look for differentiation – how different this is from other products, what the product is and what is it not in terms of looks, function, image etc. As Nicholas Ind says in the book “Living the Brand”: “Strong brands tend to be opinionated. They clearly stand for something and provide a 25
  26. 26. Fear Factor positive reason of choice. Many brands do not have this clarity.” The most important criteria are its functionality, relevance and differentiation. It is not only differentiation that makes a strong brand. We hear such statements as the famous “Differentiate or die” of Jack Trout, or others “Differentiation is critical”, “It is not a brand if it is not differentiated, the brand equals differentiation” and the likes. Yes, differentiation is absolutely critical and without it nothing happens – your brand will not get noticed, you will be one of the fish in the shovel, one sheep in the herd. “If you are standing in a pack of penguins, it takes something more than a black and white suite and two step shuffle to get noticed.” I do hire people to my team quite often. I always ask the candidates one question: “Could you describe mobile operators in the Czech market using some personality attributes that best explain who they are?” There are three major players in our market. The majority of candidates start describing one of our competitors’ brands – one or the other, and only then, as last they come to our brand, they place in the middle of those two, and with no attributes mentioned. They are not able to describe our brand at all. The absence of differentiation leads to price competition and low margins, ultimately to commoditization. Although differentiation is critical, it is not a complete solution. It needs continuous innovation and relevance. Differentiated features, so called preference drivers, must be relevant to customers and offer them benefits and utility. There are some brands that know what differentiation is today. For example Google, with no advertising. Or how they did their IPO (initial public offering) in a completely different way to others advice. They did not follow the crowd on a business model and developed a new one, stayed simple and resisted making the site busy. From the launch of the site in 1998 they didn’t change it much – it remained very simple, very focused. 26
  27. 27. Fear Factor This is more or less how the site looks like since its launch. Or take IKEA. They developed furniture you had to put together yourself. And not ony that, they called it strange Swedish names that nobody can pronounce nor remember. They built stores where you had to walk through the whole store to get out. They did everything against the best marketing advice in the world. Another example is Toyota with their Prius – the first mass-produced hybrid vehicle. They built electric cars when the whole rest of the industry said it would be a waste of money. Method – the fastest growing private company in the U.S. producing cleaning products with no toxins in them. Unlike other cleaning products, they clean with natural ingredients. Other cleaning products kill the dirt with toxins – they clean their own home by killing everything outside of their home. People do not have to hide their products under their sinks. They changed their category of detergents to something I would call „responsible cleaning cosmetics for home“. 27
  28. 28. Fear Factor Method multisurface cleaner, www.methodhome.com To build a courageous brand, as Nicholas Ind says in his book „Living the Brand“, the brand in itself must contain tension. If the brand values are expressing what the organization does well, there is little motivation for experimentation and trying new things. But if the brand values are stretching and pulling the organization to sharper ends, there is a sense of dynamics that drives the brand to deliver on those definitions. The question is whether we are prepared to live with this anxiety that is the pre-requisite for building a strong fearless brand. Mediocre brands I think we live in time when we experience a dramatic crisis in differentiation. In 2000, two research companies in US made a study about how well brands are differentiated in a diverse set of categories. They analyzed 46 product/service categories and found that the leading brands in 40 of these were becoming less differentiated in the minds of consumers – as Bruce Tait writes in his article about How marketing science undermines brands at Tait Subler. According to “The Commoditization of Brands and Its Implications for Marketers," by Copernicus Marketing Consulting, most products and services are becoming more similar than different. The study proves that despite billions of dollars are 28
  29. 29. Fear Factor spent on marketing and branding every year, most companies have commoditized their product and service brands. None of the 51 product and service categories analyzed in the brand trends study are becoming more differentiated over time and 90 percent are declining in differentiation, with banks, bookstores, bottled water, credit cards, discount stores, and fast food restaurants taking the lead in becoming much more similar and having the least brand differentiation. By "commoditized," Copernicus means a company's products and services are amazingly similar to competitor products and services in features, advertising, and price. It is true. If we look into the category of mobile operators, the products, the services are very similar if not the same. Price as differentiator doesn’t last long. If one operator launches price promotion one week, the others would do so in a week or two later. Almost every operator claims to enrich life of people or bringing them closer, connecting them… And not only operators, all brands around the world picked up on the community jargon. They became all alike. If you look at their positioning statements, you would understand where the trouble is. Words that are sharp, clear, polarizing, will never be on the map of mass brands. Just the word mass brand defines the lack of identity and courage. Leading suppliers and partners Agencies are under pressure of losing their clients at all times. And clients keep distance from their agencies. Clients do not allow agencies being part of their strategic planning and thus end up feeling and doing the „packaging“ only for their clients‘ products and services. Yes, there are exceptions to this – there are some agencies that have their team sitting directly at the clients‘ offices, there are some clients that call upon their agencies to come in when they work on future strategy. But these are rather rare examples. Most clients consider creative agencies as mere suppliers of communication solution and if it sucks, they suck the agency and they take a new one on board until they suck the blood out of them once again. In the globalized world, the reality usually is that a global client has a global agency. Two corporations trying to find creative solutions? Instead of one „polishing“ system – creativity killing system, you have two? I have never seen something good coming out of such equation. Everything takes ages, every creative idea is embracing everything and embracing nothing in the same time, 29
  30. 30. Fear Factor everything is applicable for each market and therefore very generic in order to be able to communicate various products under it. It is meant to cost less but it turns out to be more expensive. It is meant to sell and in the end it doesn’t. It is meant to build the brand (consistency and integration) and in the end it doesn’t, people do not like it nor hate it. If creative work doesn’t create opinions and conversations, then it is not creative at all. So in the end client isn’t happy, the agency isn’t happy, they both would like to get rid of the other and yet they stay living in the terrible marriage for long – they do not talk openly, there is no trust in that relationship, they do not love each other anymore, they do not find solutions but problems and issues, clients find ways how to work with other agencies, they punish each other if the contract allows them to. And the fear cloud is hanging above this all. Clients tend to do tenders for communication needs they have. They want to collect the best possible creative ideas at all times and do not care much about developing a relationship of trust, respect, openess and no fear among them and their agencies. Most agencies run scared, most of the time... Frightened people are powerless to produce good advertising...If I were a client, I would do everything in my power to emancipate my agencies from fear, even to the extent of giving them long-term contracts. - David Ogilvy Testing To eliminate risk and fear in corporations, they test everything. People are afraid of their failure – they may fail to deliver business results or fulfill their KPI’s, they are afraid of professional failure, therefore it is very handy to cover their back with data from researches. They first search for insights, study consumer needs, lifestyles, business potential, ask people about the product, whether they would need it, how would they use it, when, how much would they be willing to pay for it etc. They calculate business cases for everything they do, pilot it, pretest creative work - communication concets for the same, sometimes multiple times... Before they launch anything, the product idea goes through so many stages of checks. However creative the initial idea might be, the creativity is burnt in all these „polishing“ stages. 30
  31. 31. Fear Factor Source: 99 Fears by Nedko Solakov I notice increasing reluctance on the part of marketing executives to use judgment; they are coming to rely too much on research, and they use it as a drunkard uses a lamp post for support, rather than for illumination. - David Ogilvy As Marty Neumeier writes in the Brand Gap, often the first thing companies do when faced with a big decision they order up a massive study – the bigger the better. He says that if you want to cover your butt, go for a big stack of quantitative data. They are impressive and can lead to analysis paralysis when companies try to turn them into meaningful initiatives. All those numbers cause people to focus on small, incremental improvements that do not require any real courage and in the end do not make much difference either. He proposes to go for quick and dirty studies because they save time and money, plus they focus on one problem at a time. 31
  32. 32. Fear Factor Analysis paralysis, Tom Fishburne, www.tomfishburne.com There are many studies that show decline in brand differentiation. Marketing consultant Bruce Tait writes about how marketing science undermines brands by fostering me-too strategies. The disappearing differentiation forces brands to compete merely on price. He explains why in his article for AdMap in 2004: “If brands are to succeed they need to be based on differentiated, unfamiliar brand strategies. Unfortunately, these are the exact same ideas that people initially dislike. That’s why quantitative testing of alternative positioning ideas will likely systematically kill the more original ideas, and people will prefer the ones that are closest to what they already know.” He goes on explaining how managers cover their backs with results from researches: “Brand building is dangerous to your career if you don’t cover yourself with research. The market place is a complex and ever-changing environment. Things can go wrong. But if you do all the right testing beforehand and if you get a good test score, who could really blame you? Everyone involved in a failure can point at the test scores and ask, ‘Who could’ve known?” 32
  33. 33. Fear Factor KPI’S Most companies, especially those listed in the international stock exchanges focus on short-term results. The company is under huge pressure of their financial KPI’s (ARPU, EBITDA, OFCF, CAPEX, OPEX etc.) and every decision that is made in such company is mainly resting on financial basis. Long-term orientation is usually missing. It is rather secondary or tertiary. Long-term goals are soft, usually emotional – e.g. build love mark, become most fair and transparent, best service provider, best customer service or treatment etc. All these goals are too soft and not easy to embrace by management. Brand prostitutes Majority of brands go where the cash is. They go anywhere where they see a positive business case. They do not care whether it would fulfill their vision – do they have one and are they true to it? They do not care about their strategy, whether this belongs to their brand personality or whether this continues telling their brand story, whether this is for that customer whose need they aim to fulfill. Instead, they go where they can fill their pockets, where a new revenue potential is, where the business case is, they do not question themselves beyond financials and capacity (revenue, capital expenses, technical or time capacity)…they claim they are for everyone, but who are they and if so, are they the same to everyone or different to different people? I an interview with Beef magazine I called this phenomenon as “brand prostitution”. This means that you do not care to whom you sell your brand, your products and services, you offer them to all, merely taking care about the money you get from them. Below is a sticker designed by Peter Savillle, great English visual communications designer, created as an expression of anger over the professional prostitution (can we call it professional if it is prostitution?) of people working in the visual communications. Agencies, designers do work for everyone, they do not chose with whom they work and whom they would never work with as clients. What is the value of their work then? Has creative work become a commodity too? Is there no differentiation in it? Do designers go where the cash is, opposed to where the opportunity for creative expression is? 33
  34. 34. Fear Factor Sticker by Peter Saville, This is not a brothel, www.cpluv.com In an interview with Kjell NORDSTRÖM, author of the book Funky Business (FT.com 2000) and one of Europe’s leading business gurus, he talks about differentiation, and how companies should differentiate themselves “ The starting point must be a neat niche, a funky few, a global tribe. You need to understand your particular tribe better than anyone else. You must know what makes them tick, what scares them, what gets them out of bed in the morning, what turns them on. The tribe is the basic unit of business. If you don’t know who your tribe is or anything about them, you are not going to stand out from the crowd. The good news is that there are a lot of tribes out there – and some are enormous. It’s just a question of identifying them, understanding them and meeting their needs better than anyone else. We recently came upon a great example of this in financial services. The American Steve Dunlap was refused a loan to build a resort for homosexuals. So he decided to establish the Gay & Lesbian Internet Bank. The basic idea is to target the 21 million or so American gays and lesbians – a group with a combined annual budget of some $800 billion. Tribes come in a variety of shapes and forms. Pilgrims create tribes. Every year, 75,000 Chevrolet Suburban vans are sold in Saudi Arabia as the pilgrims who visit Mecca are only allowed to enter the city in a vehicle with specific measurements. The only car that fits the specs happens to be the Chevrolet Suburban. If you focus your energy on creating and then exploiting an extremely narrow niche you can make a lot of money. The tribe may consist of one-legged, 34
  35. 35. Fear Factor homosexual, dentists. It may be lawyers who race pigeons. But if you manage to capture these customers globally, you can make a lot of money. There are riches in niches.” Reactiveness to competition Many brands are too reactive to their competition, rather than being proactive in fulfilling their own brand vision. Instead of what they should be doing, they act on their competition. I think it is a result of a, not knowing who the brand is, what it stands for and what their strategy is and b, the brand is a victim of short-term results delivery that most publicly traded companies are. As a result of those, brands tend to fall into a trap of being too reactive to their competition and they end up doing what their competition is doing or they are trying to do it differently for the sake of differentiating themselves from them. I ask myself a question – are those brands afraid of their competitors or of their own selves? I give you an example. Brand B, main competitor of brand A, introduces a 30% promo on a service. Company A, reacts in no time and does the same or even better – it offers a 50% promo on the same or similar service. Where does this lead? For a brand, price or product is usually not the point of difference anymore. What is it then? From products, to services, brands should concentrate on delivering unique experiences (unique for their brand) in every contact with their customers. It isn’t easy, because experiences are intangible and emotional. Communication In terms of communication, we are locked in an old system, in silos of the past – agencies as well as clients. We talk and act in ATL and BTL. In the same time, most of us already understand that the boundaries between ATL and BTL are blurred or vanished completely. What was ATL yesterday is BTL today and vice versa. It very much depends on the business and communication objectives and what the role of or expectation from each medium is. Imagine drawing ATL and BTL media on a 3D map today, you would have to shake the map entirely according to the new realities on the market. We are still sitting in those traditional boxes though, we still measure classical media because there are the biggest budgets behind them. We remunerate agencies for what? For ATL 35
  36. 36. Fear Factor mainly. I think the biggest disaster is that big corporations attract each other – a client - corporation works with an agency – corporation and they both have become victims of the large perfected norm and mediocrity. The process does not allow them to deliver something extraordinary and original. Growing into this, clients ask for large-scale campaigns to find cost-efficiencies, relying on economies of scale and consistency of their brand look across all markets they operate, however this brings along with itself lack of courageous and venturous creative ideas, approaches etc. Economies of scale applied on creativity? Each agency is aware that their clients will reject a too bald idea in order not to upset their customers. The agency works with this fear of not being able to present the best ideas to their clients or to their headquarters before even showing it to the client. So many times I sit in creative presentations where local agency shows us something they shouldn’t be showing us because international agency or international client did not approve this to be shown to us locally. Or, even worse, international client stops local agency and local client developing local creative completely. I always thought more creative ideas on table equals more choice. In terms of media, specially now when not only the new media landscape but also the financial crisis puts pressure on communication industry, we all talk about trying out new means of communication, reallocating budgets to other media than the classical mix, measuring other media than just TV or print. But then if you look into the numbers, not much has changed in the end. A study of top companies’ chief marketing officers conducted by an industry trade group found that in 2009 the top advertisers are planning to spend only 10% of their budgets on digital media, which is not much of a difference from 2008. Data from TNS Media Intelligence show remarkable steadiness in the list of the top TV advertisers for 2007 and 2008 and only confirm that no big company will change their rules and spend their ad dollars in radical ways. As Jon Fire discusses in his article “Why advertising isn’t dead yet” in the Business Week from 30th of April 2009: “And who in charge of ad budgets will try radical moves today, when a failure will cost them their jobs? This is a comfort- food environment, and no ad form is more familiar to a chief marketing officer than the good old 30-second spot. No one was ever fired for buying a prime-time TV ad. Multiply a rush to the familiar throughout a marketplace, and the result is higher prices. Which brings us to fear - fear of trying a new approach in a difficult time. Fear of missing out on getting your ads on the hottest shows and losing out to your top competitor because they stepped up at the upfronts and you didn’t.” 36
  37. 37. Fear Factor Is it just talking, considering, but actually being afraid to do it, to take that decision and make it happen? Why for example mobile operators do not use as the only or as a primary media channel that they own - the mobile phone? Who else should and why is there so much fear in that? Why do they sell it to other companies? To find new sources of revenue? On the other hand, clients avoid to chose courageous creative work, because they are afraid that their product or service might not be accepted, as reason of being too different, provoking, edgy, polarizing, and ultimately ending with scaring off, putting off or upsetting people – damaging their brand, not delivering expected sales figures, losing their faces, bonuses or jobs. When you find out in your advertising scores that a character was not liked or your ad does not fit your brand, what would you do as a brand manager? Would you change the character or would you ask people whether your ad is what they would expect of your brand next time? Or would you rather interpret it this way – it is great, the main hero brought attention of people, it made our ad standing out from the ad break, he as a type was new to them, and you created clear opinions about your brand via the ad – you know which people loved your ad and which clearly did not like it in the same time. What usually happens is the first case, after finding out these issues in their advertising researches, clients make their ads safer and agencies bring safer ideas to the creative presentations next time. Where is the courage and fun gone from our business? 37
  38. 38. Fear Factor Organizational culture Organizational culture plays a key role in building a company, business that is self-confident, clear in direction, with defined edges, personality etc. and not the opposite of it, a company full of fear, ultimately a company that is afraid to differentiate. It is important to built failure-allowing culture in an organization. Look at DDB for example. They built culture resting on four main pillars, four main values. They call them four freedoms - Freedom from fear, Freedom to fail, Freedom from chaos, Freedom to be. Because talent is the ultimate resource of any creative enterprise, an organization committed to creative Four freedoms of DDB (www.ddb.com) achievement must first be an organization committed to the identification and nurturing of talent. Talent is rare, hard to identify, and only moderately useful in its raw state. To realize its full potential, those responsible for the success of the organization must provide talent with an environment that encourages OrganizationalThe most important element of such a talent-friendly environment is the presence of creative pursuits. structure freedom. Organizational structure influences the way decisions are made, at how many Therefore, the managers of DDB Worldwide all strive to provide, within each agency’s structure, four freedoms levels, they influence responsibility, accountability of people, empowerment, to each individual. speed of implementation, change management etc. Organizational structure is important factorFEAR FREEDOM FROM influencing the fear to differentiate. If a company reaches certain Talent freezes in the grip of fear. The creative mind shuts down, constricting the natural flow of ideas. Fear is size and itbeyondrigid complex processes and levels of decision-making, it slows paralyzing has reason. downnot the what’s even fear. Fearitresults from not opportunity toFear is created by motivesedgy, It is and truth that people worse kills every knowing the truth. deliver something that are suspect, by decisions made in secret for which the basis is not fully disclosed, and by the arbitrary use of courageous and differentiating. power by those who control an idea’s destiny. Fear is created by intimidation. Management by intimidation has no place in our organization. Large organizations ultimately grow too big to bend and move. There is a point in time when TO company reaches certain size and it starts showing similar FREEDOM a FAIL symptoms – symptoms of talent to venture beyond the known — to poke into the unheard of — to pick It is in the very nature of creative corporations. through scary places untrod by conventional minds. Because there are no assurances that such creative forays will succeed, the explorers must be granted the freedom to fail in order to sustain their desire to venture forth again. A lot of corporations are obsessed by their size of organs and organizations. It It is the job of management to first point talented people in the right direction, then judge the value of their seems that But if the quest for the new is responsible and and powerful, yet more arrogant, discoveries. size makes them more important intelligent, talent must not be criticized for daring to fail. self-involved, locked, disintegrated, slow and ineffective. Virgin Group, on the other hand, tries to keep it small in spite of growing bigger and effectively maximize entrepreneurial spirit of its employees and minimize bureaucracy of its systems. 38
  39. 39. Fear Factor Google for example, with its 20,000 employees is still relatively small, yet is starts to show the first corporate symptoms – e.g. lots of their designers leave due to rigid testing of everything, they feel they have lost the playground they were used to have. The recent reorganization that is going on now is a proof of it too – Google has grown to a certain size and struggles with silos and disintegration. As Richard Branson explains: “Every time a business gets too big, we start a new one. Keeping things small, means keeping things personal. Keeping things personal means keeping people that really matter.” Suppliers, such as advertising or media agencies, they talk to only communication counterparts at the client side. Their position is so vulnerable and frustrating. They cannot influence strategy, vision, what kind of services the brand will launch etc. and the more it increases when large agencies produce international solutions – one solution for all markets and their products become more and more irrelevant to the specific markets. They are trying to save rather than trying to grow deeper into the organizations/clients to become invaluable. It looks like they were afraid or already gave up on trying to change the game. Fear factor and financial crisis Fear in organizations is even bigger during the times of financial crisis. As we are currently all coping with this issue, I find it appropriate to spend some time talking about implications of fear during this period of time. If a company doesn’t know what it stands for, what its clear positioning is, what its differentiator is, what its core values are, what its value proposition is, what it should do, how and for whom, it will show during crisis more than ever before. The basics are at question during crisis. Most companies start saving on everything and realize later they save for nothing. No company has grown from saving, saving overall adds to shrinking of a company. Most companies make a mistake of not saving for what might have been important. It is because they do not know what is important for their brand and mainly for their customers. Financial crisis, as we experience it now, is a period of panic, period when fear has grown out of control in a company and it ultimately touches everything in the company business context - each bit of business and each stakeholder. 39
  40. 40. Fear Factor Employees are paralyzed. They do not know whether they will have their jobs tomorrow. Managers don’t know how to motivate their people, their objectives change all the time or are set to be not fulfilled in order to meet budgets for bonuses. Budgets are cut – budgets for everything – marketing spend, education, travel, wages, rewards etc., bad news is the news. Activities are cut. Things nice to have are gone. The things that have been experimental are gone. The playground is gone. The company saves on everything, it is ill and needs a remedy. What is it? Shareholders want more dividends. Because future revenue is at risk, they want more money now. Suppliers have lesser briefs, lesser jobs, less profit. Customers feel company is playing new tricks with them - they come up with new pricing plans, they change terms and conditions, communication towards them changes to one topic only – wanting more money from them. It is the chopping, cutting, saving, squeezing, snip snap time. The question is - what do those companies save for? Is it just saving everywhere because there is a need to save? Is it saving for shareholders asking for more dividends or is it saving for compensation of financial loss in some other business in the corporate group? Or, on the other hand, is it saving for something that is strategic, some new business opportunity? Is it saving on some areas of business in order to grow other more important areas of business that might not be important today but will become important tomorrow? The latter one has a big potential in motivating people too instead of scaring the shit out of them by the saving mode applied on everything. The crisis is time of clear and also radical decisions. Management not able to make these kinds of decisions only adds to the destructive effects of fear during crisis. Managers who were unable to make decisions before, those who always relied on consensus or made the “not to annoy anyone” decisions, will not give a clear message to everyone in the company now. This will not mobilize company’s energy to where it is needed. All employees will swim in fear and resign on their performance, for they will not be able to motivate themselves when aims, goals, targets are not made tangible to them. What is better – to be lost in the dark of a tunnel or to see the light at the end of that tunnel? Gregory Berns, M.D., Ph.D., from the Center for Neuropolicy at Emory University, talks about impacts of fear on decision making and preference of people to chose their time for punishment themselves rather than waiting for it in time they would not be prepared for it. “Everyone I know is scared. Workers’ fear has generalized 40
  41. 41. Fear Factor to their workplace and everything associated with work and money. We are caught in a spiral in which we are so scared of losing our jobs, or our savings, that fear overtakes our brains. And while fear is a deep-seated and adaptive evolutionary drive for self-preservation, it makes it impossible to concentrate on anything but saving our skin by getting out of the box intact. Ultimately, no good can come from this type of decision-making. Fear prompts retreat. It is the antipode to progress. Just when we need new ideas most, everyone is seized up in fear, trying to prevent losing what we have left.” He is a neuroeconomist, which means that he uses brain-scanning technologies like magnetic resonance imaging to decode the decision-making systems of the human mind. He and his colleagues conducted a brain-imaging experiment with their own version of a Skinner box. Instead of a box, the participants were inside an M.R.I. scanner. Instead of using an electrified floor, they attached electrodes to the tops of their feet. Although not unbearably painful, the shocks were designed to be unpleasant enough that the individual would prefer to avoid them altogether. The trick was that they had to wait for the shocks. Every trial began with a statement of how big the shock would be and how long they would have to wait for it: a range of one to almost 30 seconds. For many people, the waiting for the shock was worse than the shock itself. Given a choice, almost everyone preferred to expedite the shock rather than wait for it. Nearly a third feared waiting so much that, when given the chance, they preferred getting a bigger shock right away to waiting for a smaller shock later. It sounds illogical, but fear — whether of pain or of losing a job — does strange things to decision-making. Some people showed strong fear conditioning. Their brains, all their neural resources were fully occupied in dealing with the impending shock. This worrying consumed a lot of energy of the respondents, which lead them to having less available neural processing power to deal with other tasks. This is important because it has to do with so called “endowment effect,” which Berns describes as the innate tendency to value things we own more highly than everyone else does. Furthermore, a recent brain imaging study showed that the same parts of the brain they observed in this experiment are also active when people must sell something they are attached to. The implication is that when our brains sense 41
  42. 42. Fear Factor pain, or anticipate loss, we tend to hold onto what we have. When everyone does this at once, the result is a downward economic spiral. When the fear system of the brain is active, exploratory activity and risk-taking are turned off. The first order of business, then, is to neutralize that system. The question is how to do that. Berns suggests avoiding people who are overly pessimistic about the economy or tuning out media that fan emotional flames e.g. closing the Web page with the market ticker. It does mean being prepared, but not being a hyper-vigilant, everyone-in-the-bunker type. He doesn’t care what business it is we are in, but if we think our business will eventually come back to what it was (from the bumpy times to the calm times), our brain is in the grips of the fear-based endowment effect. That is why Berns is always looking for new opportunities. Personally, I find a lot of opportunities in the crisis. It offers new solutions, that haven’t been thought of or yet didn’t dare to be taken by the management. Since all financial tricks and moves from here to there, pricing tactics, promos, changes of conditions to use a service and the likes have run out of the repertoar of CFOs, the time has come to seek new alternatives. Crisis brings clarity to things. Strategy is clarified. Product roadmaps are simplified. Communication is made more effective. Companies do less but with more impact. And those who only look for their own enrichment will die early. Research Methodology I have chosen few types of approaches because each of them offered me a different set of data, richness, depth, openness of respondents and further references for researching this topic. Quantitative research First, I started with a quantitative research. I created a questionnaire at the www.surveymonkey.com in order to be able to collect and analyze data easily (See Appendix 1). I found out that my first attempt to send out questionnaires in MS Word via email was a failure – in terms of user-friendliness, distribution, speed, response rate and analysis. I realized this early enough and almost in no 42
  43. 43. Fear Factor time I have switched everything to online version of questionnaire at Surveymonkey.com. I sent out the questionnaire to my international professional contacts (approximately 400 people) including respondents from various industries, in different management levels, with various job profiles, men and women. The collection of data took few weeks. The first weeks had the best response rate than the later ones. The response rate to the questionnaire was 14%, this means the final sample size of respondents was 56. The gender distribution of the sample was the following: Qualitative research Answers on LinkedIn I have asked a question of my interest at a professional networking site LinkedIn, in order to get a fast but quality answers from professionals in my network as well as outside my professional network. I got more than 50 responses in 2 weeks. See the Answers at http://www.linkedin.com/answers?rateAnswers=&questionID=432422&askerID=1 5250193&goback=.ahp.avq_432422_15250193_0_*2.ahp 43
  44. 44. Fear Factor In this case, it doesn’t make much sense to talk about response rate, since the responses I got were from within my network and outside of my network, so I actually did not have any control over the reach of the question I asked initially. This is the beauty of the social networking. The final number of respondents is 55. Interviews In addition, I planned to make few interviews, to be able to dive into the topic of Fear factor more deeply. First interview, I planned to do with Google, with Tatana Le Moigne, leader of Google Czech republic. Why Google? I believe, they are one of the most often mentioned brands today and have grown quite big in a short period of time to show symptoms of corporations (the fear to differentiate), and they have some sort of magnetism to their brand without really trying hard and chasing it. Second, I planned to do interview with Richard Branson of Virgin Atlantic, but social networks did not work me through that far to be able to connect with him directly, in spite of having few sparks of almost being connected. Third, I wanted to interview the author of Brand Gap, Mr. Marty Neumeier, the president of Neutron LLC, San Francisco based company specializing in brand collaboration. Unfortunately I got only this differentiating out of office response until this date “Neutron will be closed from June 15 until August 31 for vacation and "strategic remodeling." I'll be answering my emails periodically.” I guess they are busy differentiating themselves and hopefully will answer after they are done for some time again. Finally, I made interview “only” with Google – Tatiana Le Moigne, General Manager for Czech republic. Self-study Last, but not least, I have done a lot of self-study, researching in books and on Internet over the past 10 months. All of my resources you will find referenced in the bibliography. Research findings 1, Research findings – Quantitative research 44
  45. 45. Fear Factor See complete research data in the appendix (Appendix #2). I could not format this from Internet the way it would be legible, therefore I have chosen this alternative that makes it user-friendly for every reader. 2, Research findings – Qualitative research I have asked a question in LinkedIn (social networking tool connecting professionals all over the world) and these are the answers I got within 2 weeks. I list them out as they were submitted. I summarize my comments in the end. My question: Do you think companies, brands suffer from fear to differentiate? I feel there is a lot of average and mediocre brands around today. As if brands lost their guts and courage to stand out and stand for something crisp. I would like to get your opinion about this, do you think this is caused by fear and what are its sources or drivers? Craig Markus, Executive Creative Director/EVP at McCann Erickson & Tag Ideation/NY I don't think the fear that is hurting them is a fear to differentiate. I think most brands want to differentiate themselves and still try. But i think the fear of failing businesses, not making numbers, losing share, not making test scores, etc is forcing the managers of brands to fall back to behavior that is not innovative or relevant. They are retreating to what is 'comfortable' for them and not what is going to be interesting to today's consumers. Most marketers are not trained to understand how to connect with people who now have so much power to turn them off, etc. Plus the distribution system of messaging is so confusing to them, i find most paralyzed. Advertisers are sued to taking time to bring messages to consumers. But digital is so quick and responsive. Some brands are standing out, but it's coming form agencies that are expert at doing this, like Crispin. Clients that go there, go there seeking and wanting it. Geoff Fletcher, Independent Civil Engineering Professional From a marketing perspective I would say that business must suffer if differentiation is lacking since all that's left for customers to choose is price, and they won't want to pay more for the same thing. So, if differentiation is the key to start effective marketing (ie. to make money and grow business) then I wouldn't say that fear holds it back but probably ignorance, lack of skill or even laziness. The beauty of differentiation at all levels - right up to the peak where 45
  46. 46. Fear Factor difference can be protected via patent - is that it reduces direct competition and increases scope for perception & adding of value, and is more furtile ground for growing customer relationships. Renato Geribello, Experienced Branding, Sports Marketing Executive Probably so! Mainly because corporations, and those who run them, are afraid to “lose” face in front of the competition (externally and internally). Brands are basically people, which represent them on a day to day basis, and like anybody in this planet they are also afraid. Economic downturn moments, like todays, are the exact pinpoint where brands should try to differentiate themselves from the crowd. The era of mass marketing is at an end, being replaced very rapidly by individual marketing and this new scenario will enforce on brands, the necessity to be present on a totally new level with a totally new type of commitment. Eileen Burick, Creator of High-End Marketing Collateral Materials and Visually Distinctive Design for the Web Connecting with the hearts and minds of consumers to make a brand truly relevant, different and engaging is challenging and risky and requires an investment in exploring options that are outside the proverbial box. Most companies would rather be "safe" - focusing on product features and rational sales arguments - rather than risk the unknown with an innovative, emotionally connective communication concept and design solution. They look only at the numbers and not the opportunity, which results in the watering down of design, concept and true connection. Branding "differentiation" is a function of design - conceptual and visual design components that work together to infuse a brand with emotion, relevance and impact. And, providing for the customer to interactively participate in the brand experience. Micah Jayne, Director, Producer, Viral strategizer, maker of video stuff There are a few different ways to look at your question, it seems to me, since brands are, themselves, passive constructs. Brand building and brand perception 46
  47. 47. Fear Factor may seem to lack "guts" or courage mainly because of process. We all know that fairy tale about the "one man/woman agency" - no matter how hard everyone works, it's still creativity by committee in 99.9% of cases. The more levels of direct or indirect management that get stacked up on top of the creative process, the less crisp the executions are going to seem because of all the filters. It takes an exceptionally bold or desperate client to open the floodgates, so to speak - to radically alter perception or to move outside proscribed corporate guidelines for brand management. Smaller companies would be better situated to avoid this trap, but then, they don't have the budgets that big multinationals do, so people are less likely to be exposed to their efforts. You never hear of a company that tries NOT to differentiate its products or services, but why is that? Is "just another mobile operator" going to get my business if the price point is right? Probably. Why not, if it works? Could someone convince me that a particular brand's offer is more desirable, despite the concrete offers? Maybe, if they're exceptionally clever. Maybe the problem is that there's just not enough clever around to do the job for every widget and dingus on the market. Maybe consumers are OD'ing on clever and are starting to see through the parade of latest/greatest. In terms of products, "store brand" or generic products make up a massive part of profits in supermarkets and grocery chains. The Tescos of the world have quietly realized that there are only so many ways you can differentiate washing powder before the price difference just seems absurd. Maybe some companies fear to "not differentiate" themselves because the pursuit of designer cachet has bled out of the designer arena and come to be such an anticipated part of consumer AND corporate culture. It seems like an underlying problem might be that products and services - not brands - have lost their "guts" (true innovation and novelty). I'm not sure what role fear has to play in any of this, to be honest. Most people want to keep their jobs, and when the bottom line is the determining factor, it doesn't leave many people with too much wiggle room. One of my clients took a BIG chance on a project we did together and it ended up working out for him. I can't say that it was particularly "courageous", but it required clarity, confidence and an extremely grounded, considered approach to the whole project on his part. It's not something most people in his position have the patience or aptitude to deal with. It wasn't a big chance in terms of budget spent, but the potential 47
  48. 48. Fear Factor effects on image were serious. This is someone representing a very large company with a very staid brand perception and tight controls. In the end, the only people who criticized him were lateral colleagues who were probably just jealous that they hadn't taken a similar chance themselves. Tim Joseph, Digital Retail Specialist I think we see many brands that are stale right now because there has been a dominance of big business controlling the market's product offerings for too long of a period. Typically it is small business owners that find the innovation in the marketplace, but their ability to bring their products to market has been stifled by the monopolization of the big brand. That being said, I think right now we are experiencing a shift. Big businesses are failing because they became to complacent with their stable brands and ignored innovation. The big unknown is whether or not the small business inventors will revive the marketplace with new ideas and the next big thing. Brian Beasley, CPWA(SM), Servant Leader, Partner In financial services, it certainly is the case. Broker-dealers tend to be VERY cautious about differentiating their services, especially their research methods and investment recommendations. Just look at how many investment houses say the same/similar things. As a result, commoditization sets in, leaving "relationship" as the sole differentiator. There is such opportunity for those who ACTUALLY choose to offer something unique! Stephen Blanchette, Partner, Senior Consultant at Chemistry (Europe), a unit of Hans Feldhaeuser GmbH Success breeds fear and resistance to change. Once a company reaches a certain size and level of success, it is very common for fear to creep into the mindset of senior management - "we wouldn't want to do anything that might upset our current customers..." is a common reaction. The trouble with this thinking is that it encourages stagnation and allows a once-differentiated brand to be immitated and challenged. Eventually, this leads to parity and apathy among 48
  49. 49. Fear Factor customers. On the contrary, a continued focus on evolution will keep a brand fresh and differentiated over time. Grahame Maher, former CEO of Vodafone Czech republic, current CEO of Vodafone Qatar Absolutely. Great brands are loved or hated but never mediocre. Most brands are mediocre as they focus on being safe rather than standing for what they really belive in! I believe the cause is that leaders in businesses think they should conform to social norms and standards rather than what they believe in. Vodafone Czech republic, for example, dared to be different and not give new customers better deals than existing ones at Christmas. You and the marketing teams work and the best campaign ever in Czech! So Oskar and Vodafone Czech have done this and it is the secret to success of a brand. BE BRAVE to be different and real for your customers. Hiroshi Marras (dreamin' Doha), Online Sales & Marketing Manager at Tiscali There is also another side of the moon. Often the management is so busy taking care of numbers and regulation and lose the sense of the market and the importance of the brand, which is the first step into suicide, in my honest opinion. There is also the ignorance elements on the table. I mean, how many CEOs are aware about the relevance that viral marketing is getting into built and sustain the brand and the relationship with the customers? In very few words, the change must be accepted (the dream is proposed) from the head of management. And it is not free at all. Tomas Otradovec, CEO & founder, Uncle Propaganda Management I agree, absolutely. We can observe total lack of guts to stand out and be unique. Our culture today is a result of massive levelling processes that us people in brands & marketing had started in 80's and 90's. 2009's common practice: Make a statement. Get as many people as you can to agree with it. Spread it around & publish it. Get cash. Being mediocre pays off. I guess that fear to be different is as old as humankind itself. Therefore the most 49
  50. 50. Fear Factor successful brands today are the ones who can attract / dictate masses. The masses love conformity. And uniforms. Vicente García, Founder at Kardumen. Planner & Creative Director 1. Choosing to stand for something means saying NO to everything else ... and that's what, I have the feeling, companies are afraid of. 2. It is the company top management, which decisions really have an impact in the organization & market, who should be extremely involve in the branding & brand communication. In most companies, they are not involve and in others these guys don't have the expertise (they are finance people, ...). 3. Even when companies have well defined what they stand for, people in the company do not understand the role and mission of these values and soon they become like and empty and boring litany. And then, a similar phenomenon as with bad advertising occurs ... company people don't see or listen to them anymore. The back to basics and a real understanding of the values and their mission are always good recos. In others words, being committed to what your brand stands for and truly living your/its values is the best way to turn it into a crispy positioning. 4. And finally, when you are an innovative leader that creates new categories, you are in an advantageous position to own the "logic, popular and more attractive" positioning ... when you arrive later, it is more difficult and risky to bet for something different ... how can we expect risk averse attitudes in companies that have not the guts to innovate in the first place? Radovan Grežo, copywriter, Publicis Vienna Sure, there's few brands that really stand out. But was it ever different? Maybe. Maybe it's just the ratio that went down because of the overwhelming number of brands out there these days. I'd blame the "consulting-disease". Too many brand leaders are caught up in endless semiotics games provided in complicated powerpoint presentations (by consultants of any kind these days). We're trying to find small differences, instead of making a huge leap as a result. 50
  51. 51. Fear Factor Let me give you an example: Cosmetics. I've seen a branding document by Dove. Dove's about real beauty. Not about being beautiful in the first place, but about being whatever you are and saying "It's fine, I'm not ashamed". Then there's L'Oreal. Those guys stick to their 100 years old guns in the form of perfectly photoshopped supermodels. "Beautiful is only the real beautiful. Try to be like them" kind of thinking. Now, here's the surprise: I say they're both ok and have a strong brand identity. Now, let me tell you about a brand positioning presentation of Nivea I've been subjected to a year ago. "Nivea believes it is ok to be natural, yourself, but you should be pretty" something like that. It was unbearable to listen to them, so I don't remember it exactly. Anyway, they were "in the middle". "Schoenheit ist..." and fill in anything you like. They had a lovely presentation with loads of pictures and graphs and bullet points. I'm sure all that crap was carefully designed by a consultant of some sort, supported with bulletproof research and it was really incredibly impossible to understand what the point was. so They spent all that time, energy and money on semantics. Like trying to own the word "pretty" opposed to "beautiful" which isn't Nivea anymore. Brands should take more responsibility for their life. Admit that they can't please everyone and maybe they'll be just a minory brand. But that minority can love them then. Being for everyone = loved by noone. That's the problem. I'd rather see a brand that says "yeah, a lot of people will hate us for what we are but a lot of people will love us, even beyond reason. Robert Janasek, Marketing manager, Lenovo Is your product up for the job? You can build a good brand around an average product, but you want a great brand that stands out. Does your product stand out? Is your communication agency up for the job? Is you account manager just a fresh graduate from university with no real experience? What about creative teams? Does the agency have time and resources? (I have seen total amateurism even in the biggest network agencies.) 51
  52. 52. Fear Factor Do you dare to build a big brand? Great brand is not build on average decisions are you prepared to back up your vision/strategy totally and bear responsibility? Or will you panic after first sight of problems? To wrap up: If you aim high, you may fall low. Is your company ready for that? Gerry Scullion, Interim Project Manager Great question and I generally agree. As with the stated values of competing mainstream political parties, are more brands not now being created by market research based on the most popular beliefs, in contrast to using research to test fresh creative thinking? Research is therefore driving brands, so the initial causation is simply going the other way towards a safer ROI (return on investment). Rodrigo Mesquita, Co-founder and CEO of FDM Latin America In my opinion, the executives of the largest companies, with the strongest budget and because of that more visibility, are the ones with most fear. They are always taking their actions only based on research, or common sense, afraid to loose their jobs (I know that this is important too, but not only this). They forgot their feelings, their guts as you said, they don´t take chances or oppotunities, that´s why their brands look all the same. I know it is easier to say, but we have to think about it. Until when their brands will stand with this kind of attitude? Josef Havelka, Regional Director of Strategic Planning, Ogilvy Group CEE Don't forget differentiation doesn't start with the brand. Differentiation comes into life from the choice of activities and how they are performed. It is a matter of business strategy to seek (and achieve) competitive advantage through differentiation: in a nut shell, you can either perform different activities (as your competitor) or you can do the same thing differently. One of the root causes for the increasing "similarity of things" was nicely described by two Swedish business school professors: “The ‘surplus society’ has a surplus of similar companies, employing similar people, with similar educational backgrounds, working in similar jobs, coming upwith similar ideas, producing similar things, with similar prices and similar quality.” Kjell Nordström and Jonas Ridderstråle, funky 52
  53. 53. Fear Factor business. Good brands come to life through solid differentiating business strategy. Otherwise they are doomed to remain pseudo-brands: weak and undifferentiated. Shantanu Sengupta, Strategic Planner; Advertising and Marcom Specialist; I feel it's not the fear... primarily it's the failure and lethargy to identify a differentiator that: - truly falls in line with the short-term and long-term profit objectives of the company - succeeds in convincing the decision makers that it's an "opportunity" worth exploring - gives them an understanding / courage that it has a sustainable competitive advantage Additionally majority of the companies who are in a particular product / service category, have a tendency to have a "herd" mentality - "everyone is going that way - they could not be wrong!". In short they tend to embrace mediocrity, if this gives them short term gains or saves them the hassles of taking risks. In today's ever-changing business / economic battleground, you'd rarely find a Bill Gates and Richard Branson who stick to their guns / dreams or who are not bothered about short term results as long as keeps their long-term goals intact. Kathryn Korostoff, Founder, President at Research Rockstar Yes, I think fear to be outstanding, different, to challenge the status quo is common. Sure, notable exceptions exist - but too few. I see this manifest itself with some of my clients (I help companies acquire, manage, and apply market research). You would think more folks would use the primary market research they invest in to fuel bold decisions? Take action on discovered opportunities for positioning? Seize first mover advantage in identified emerging trends? OK, that's my rant. Your question is what are the sources/drivers of such fear. I see 2 recurring themes: 1. Fear of doing anything that will turn off the existing, highly-valued customer base. Some bold moves could mean a change in brand personality, product roadmap, etc. - things that could impact current client relationships. And 53
  54. 54. Fear Factor that is scary (though options for managing it are obviously available). 2. Fear of doing anything that could have implications for sales/distribution. Companies put so much blood and sweat into their sales and distribution processes/people/channels, that any bold move that would require notable change in this area is met with huge resistance. For example, I once did a study with a client where we learned that some of its best target customer groups wanted to buy direct - not through channel partners. Technically, this would have been feasible, even desirable from a margin standpoint. But concerns about channel conflict etc. were overwhelming. Eventually, some competitors started to move in that direction, and then my client did too. When it was safe. Nick Good, Business Intelligence Principal / Business Development Manager at Business & Decision I think that fundamentally the answer is yes and for a number of reasons. When defining product direction, it is very easy to be led by whatever your competition is doing and simply follow a me-too strategy. This satsifies a number of product management pre-conceptions: 1. If the competition are doing it and they are right - then we'd better do it too. 2. If the competition are doing it and they are wrong - then at least we'll be no worse off then them. 3. If more than one competitor is doing it - then they can‘t be wrong and we can‘t be left behind. It is much more difficult to justify a direction that diverges from the norm as there is more risk. However, the lack of ability to undertake a significantly new position means that either a) there are simply not enough guts around to make the move, b) the market is not understood well enough, or c) the market has reached a level of commoditisation where innovation is therefore limited. Miroslav Steinbach, CEO, GPS Media Technology Differentiation comes into life from the choice of activities and how they are performed. I think a shortage of differentiation is caused by a short life cycle of corporate marketing managers in their particular positions and even in their particular companies. Only few of them are ready to take a risk and promote their products differently comparing to a market average. Performing with no risk, 54
  55. 55. Fear Factor and, consequently, with no fault is usually more rewarded in corporations than promoting odd ideas with 50-60% chance to succeed. Everything depends on strength of manager's personality and ability to take a challenge. Is a fear behind that or just a kind of prudence coming from an experience? Stuart Dixon, Director Euro*MBA I don't know if there is a lack of diversity in products today compared to, let's say, 10 years ago.If anything, we consume more and have a wider choice than ever. Nevertheless, if a brand differentiates, surely it becomes a different brand? A brand in itself is differentiation. If you cannot differentiate, then how can you create a brand? Sarah Hamilton, Senior Professional - IT Product Marketing and Inbound Marketing This is a thought-inspiring question. Of course, the answer could vary by company, industry, given that level of customer touch/brand affinity that is required for success differs across these elements. In general, companies that focus too strongly on following the competition and not enough on solving the problems of their current customers and prospective future customers - often times, problems that customers do not fully articulate - will risk growing stale in their offerings. And stale offerings are difficult to market authentically. In today's challenging economic times, it is possible that many companies face the need to balance innovation with the reality of the customer's budgeting situation. Some may retract their marketing efforts due to fear (fear of not understanding their changing markets in a tough economy; fear of investing dollars and people time in marketing; fear of breaking away from the competition and standing out, etc), however, I have seen many companies seize the opportunity to step up their marketing and stand out further, using crisp messaging to highlight their benefits. Of course, this messaging must take on the customer perspective as it is today, rather than under ideal market conditions. Stanislav Rejthar, Senior Head of Product Management at T-Mobile Czech Republic a.s. Great brand has to be supported by a superior product (line) that really satisfies customer. However, products nowadays are usually optimized to raise just a right level of perceived satisfaction for the limited product lifetime. Customers get what 55