Thursday, December 21, 2006

Managers leave money on the table when they ignore Brand Value

Brand Value represents a large part of the value of a company. In the case of a consumer goods or service business, it may exceed all other constitutents combined. In the case of a Business to Business company, it may be less important, but may still be well over 10-20% of the value. Yet, top management frequently does not act as though it is so critical. Some Private Equity firms now understand this well, paying a premium for a strong brand, and focusing on building the brand. However, most specialized turnaround management experts do not yet understand it, and have even less idea of how to manage it.

We fully expect this to change in the next few years. Managers will come to realize that a brand is valuable and can be made even more so.

Saturday, December 09, 2006

So what does Target do right?

It is not easy to put your finger on why the companies which do things right, get them right. I ascribe it to a closeness to the market, a sort of finger tip sensitivity and identification with the consumer. This does not mean that management has to be the same as the target market, but it needs to have a humility in listening to the market. As soon as a company thinks it has cracked the code and can do no wrong, it starts to falter. This is very difficult to reverse, as panic starts to set in. Toyota gets it right, GM does not. Toyota, while prospering, constantly is thinking of ways to do better. BMW does the same, while Ford allowed itself to become complacent. In retailing, Sears and A&P were behemoths standing astride their markets, until they started to take their consumer for granted. The old IBM did the same, and it took an outsider to the industry to change and save it.

Friday, December 08, 2006

The inevitability of Crisis - Wal-Mart

So it is becoming more and more public. After fake blogs, Andrew Young, a spokesman, putting down ethnic minorities, and continued missteps in its treatment of workers, Wal-Mart has a very public firing of a Senior Vice President of Marketing communications. The company hired her to shake up the culture, and it is clear that she did so. Whatever the rights and wrongs of her firing, it was handled clumsily, amid accusations of malfeasance. It seems that Wal-Mart has become tone deaf to society and the media. She had just hired a new advertising agency, with 10 executives voting to hire them, and now Wal-Mart has fired it, even though it has started hiring people to staff the account. So clumsy. The company has to catch its breath and think through its actions thoroughly before it pulls the trigger.

At this stage, I do not see it getting better. Competition is getting tougher, and the pressure is intensifying.

Saturday, December 02, 2006

Keeping secrets often backfires

Whether you are in business or politics, it is getting more difficult to keep secrets. All too often, if you try, and they eventually come out, the negative repercussions are even worse than if they were simply released as part of routine communications.