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Always be branding

Always be branding

Somehow, it just doesn’t feel right. In fact, to some it feels tantamount to suicidal – spending money on your brand at the very point in time when the company feels like it can least afford to invest in “intangibles”. To all those people who’ve thrown that argument at me over the years, you’re right. Well, partly.

At the “wrong” time, it absolutely doesn’t feel right.

But that’s the thing about counter-cyclical decisions. They’re out of sync with the spirit of the times – or more particularly, they’re not aligned with your spirit at the time. And, actually, if you’re honest, the feeling that you have about the futility of branding in bad times is probably the same feeling you have when things are going well. Except then it feels like you don’t need to spend money on your brand.

Whenever anyone asks me, “When’s the right time to spend money on your branding?”, I respond with, “When’s the right time to be competitive?”. I’m not being a smart-ass. There’s never a wrong time.

So many people misunderstand the role of brand. They think it’s a synonym for marketing, and marketing is a synonym for media spend.

A brand tells people who to value and why. Marketing tells them how the brand is valued, and where to access it.

The purpose of your brand is to use that perceived value to provide you, through marketing,  with sustained sales at a greater level of return than the market is inclined to give you over the longer term.

Every brand should be looking to lift value

The objective of every brand should be to to lift what people are prepared to pay, to motivate people to value you more than they would do otherwise. It doesn’t matter whether you’re a discount brand, a scale brand, a luxury brand or a cult brand, that’s the goal. It doesn’t matter whether these are boom times or bust.

If you’re not a brand, you’re a commodity. You are only worth the value that the market assigns. And in good times, many companies are happy with that. They stop spending, ride the commodity wave and bank the organic growth. They allow themselves to believe the increases are all their own doing.

Things turn pear-shaped though when the wave changes direction. When things get tough, the temptation is to hunker down – to cut expenditure and look to ride out the tough times. The myth of cost-cutting is that it makes you a more competitive company. It doesn’t. It does make you a leaner company, a less expensive company, it does provide you with more cashflow. But it doesn’t generate preference. In fact, it doesn’t generate anything.

If you’re a company in trouble, branding is not a magic bullet. It won’t suddenly save you because it probably won’t lift your perceived value fast enough before you hit the wall. It needs to be used in conjunction with a range of other turnaround initiatives, including efficiency gains. But not branding will almost certainly kill you. Without branding you are, quite literally, nothing special, whether your bank account is telling you that or not.

How good are you at saying goodbye?

Brands and customers part company for all sorts of reasons. Relationships are tidal. We outgrow the need for a brand or product, our tastes or priorities shift, we don’t live where we lived or work where we worked or spend our time doing what we used to do all the time, perhaps we decide to pass on the latest upgrade.

And, objectively, that’s a healthy thing. Those ebbs and flows provide markets with movement. They ensure that new players can enter and gain new customers and current players can change their position in a sector as they gain or lose followers.

Wish them well

Most brands have their heads around winning new customers. They seem less certain on how to say goodbye with good grace. But how you do that can, in the longer run, and in the context of your brand, be as important as how you welcome customers in the first place. Wishing them well on the next stage of their journey, and assisting them to start that stage in the best light, may well put you a lot closer to  welcoming them back.

The critical thing is to stay true to who you are and what you stand for, whilst keeping your minds open to opportunities to improve. The key question is, why are they leaving and what can you as a brand learn from that?

  • If you lose business on price, that probably means your value equation isn’t clear enough or strong enough. Don’t try to re-negotiate the result by radically repricing. That just makes your whole value structure look arbitrary and untrustworthy. If you honestly can’t afford as a brand to deliver what they want for the price they’re prepared to pay, then don’t. Explain why you can’t accept the arrangement and politely walk away.
  • If they’re leaving because of a perceived wrong or shortcoming, that probably means your relationship management and perhaps your problem escalation processes are patchy. Acknowledge that they feel the way they do, and (particularly if they have a point) tell them what you are doing to fix the problem they have identified. At least ask if you can be in touch when you have an answer. That keeps the relationship going and shows good faith in looking to rectify a situation.
  • If they’re leaving because they perceive the grass is greener, then you either have lost profile in the marketplace or you have failed to remind your customer of the value you bring. Try to find out what they think your competitor has that you don’t. You could do this through a survey or an interview. The insights gained from this exit poll can be very revealing.
  • If they don’t take up your latest offer, or they go somewhere else for it, then you either haven’t provided them with a good enough reason to change, you’ve lost ground as a brand or you’ve simply asked too much of your customers. Take a long hard look at what you’ve been asking them to buy and whether, in the context of what you’re asking them to spend, their priorities and what your competitors are offering, it’s really worth it for them.

Lifetime value is pretty much a thing of the past.

You have to assume for the most part that customers have a limited loyalty timeframe. You can’t (and often shouldn’t) fight to keep the business at any cost. But you must always fight to keep your good reputation – because at some point, the customer who left you will be ready once again to move on.

How you said goodbye can have a lot to do with whether they boomerang to you or leapfrog to yet another player. Even more importantly, how ex-customers remember you can have a huge influence on whether new customers embrace you.

Why women are driving the rethinking of the sales model (amongst other things)

Image by david_shankbone (flickr)

It’s extraordinary how so much has been made of the emergence of China and India and of the impact of new technology on the world’s economic wellbeing – and yet a factor bigger than either of these dynamics has been largely ignored.

The rise in the participation of women in the economy through full-time work – an economic force I refer to as “femonomics” – has contributed more to economic growth than either Asia or online globally, and yet the attention this has received pales in comparison to the space devoted to Silicon Valley and the rise of the subcontinent and the Red Dragon.

In the US, the input of women in the paid workforce has risen from just 20 percent in the early 20th century to close to 50 percent today, and it is still rising. According to Gerry Myers, American women now earn, control, and spend trillions of dollars annually. In fact, they are responsible for a whopping 80 – 85 percent of all purchasing decisions.

So it’s amazing that so many marketers still regard marketing to women as akin to catering to a niche market. As Fara Warner, author of The Power of the Purse, points out, when you recognise that women are not just the majority but actually the vast majority of consumers, and that their power is only going to increase, it completely changes the commercial urgency of getting to grips with women buyers.

Here are just some of the changes we’ve seen so far:

A shift in relationships. Femonomics demands not just products that address women’s priorities but also a complete rewrite of the sales process. Forget the old direct marketer’s catchcry of lifetime value. Valuable relationships are going to be increasingly derived from their women-time value. In other words, a level of relationship around the sale that women feel comfortable giving their in-demand time to (before, during and after they part with their cash).

A remix of the sales pitch. According to Michael Silverstein of Boston Consulting Group, women shop very differently from men. They research more extensively and are less likely to be influenced by ads. All of which makes for a very different marketing style. And a very different sense of what’s valuable.

Heavy media campaigns alone won’t cut it, because women increasingly look for endorsement of the products they prefer through the magazines they read and the sites they visit rather than just awareness. They want detail before committing. And they are more interested in the indirect selling style of product placement, sponsorships, and editorial.

To sell successfully to women, companies need to look at more careful building of their brand equity, a greater degree of emotional intelligence in the way they position their products, greater reliance on diverse media to lift awareness and much more thought through, holistic and engaging shopping experiences generally.

More emphasis on older consumers and ethical issues. While many marketers still seem obsessed with talking to Gen X and Y consumers, the most powerful women financially are baby boomers.

This is a group who, trendspotters say, will continue to travel more and more, which is highly motived to continue working and therefore earning after retirement, that is amongst the highest proportion of internet users, and who are likely to be in charge of unprecedented wealth. All of this makes them a substantial force to be reckoned with, and an audience that marketers need to be talking to with enthusiasm and intelligence.

This is also a group with strong community motivations and a much more ethical take on what they will purchase. Corporate social responsibility is a rising influence in the femonomics age, as consumers become increasingly aware and politicised around their spending dollar and look to spend money with brands that express points of view that they concur with.

Marketers need to rethink their definitions of age, and look to include a wider range of consideration factors, including aspects like fair trade and environmental impact, if they are to capitalise on this young-at-heart, wealthy-in-pocket market.

Time for a rethink

The influence of women on almost all aspects of branding is there for those that care to look. There’s nothing to suggest it won’t continue at a pace. That’s why organisations in my view need to address the economic power of women astutely and smartly, and respond to femonomics with even more enthusiasm and resource commitment than they have thrown at globalisation.

Susan Gunelius’ comment about how to appeal better to women online seems to me to have a wider application that all marketers should be listening to. “Building brand trust is critical to brand success, and social media gives companies the ability to do exactly that. It’s an opportunity that can also drive sales that still has room to grow. Brand managers should focus on creating diverse content that’s useful, trustworthy, transparent, and visual …”

That’s about a whole lot more than adding a new range of pretty colours to the product lines.

Discover more about the dynamics of the world’s biggest market.

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The efficiency debacle

I’m continually fascinated by how much companies ignore context. And the irony of that of course is that this is happening at the very time when we have more access to information than ever before.

Ask many companies what they are doing and they will happily tell you. Ask them what they are doing to be more competitive and the answer you get back rarely makes mention of those competitors and why a brand’s actions will stand them apart.

It’s easier to act than to distinctualise.

And that’s because actions feel like something is happening. Managers monitor their operational improvements, and believe they are future-proofing the business, maybe even outperforming their competitors. But just as quickly as they are improving their actions and becoming more efficient, their competitors are doing the same. In equally splendid isolation.

So there’s this strange dichotomy of awareness. Everyone knows how to keep up. But not how to overtake.

Continuous improvement is now a hygiene factor in so many industries. Everyone is acting to stay steady with those around them. They are all improving the same way, without particular regard for what their competitors are doing, and yet each believes that their improvements must be best and therefore that their improvements will somehow win.

The problem with “conventional wisdom” is that the better you are at acting on it, the more like everyone else you become.

Telcos used to just have to worry about phone lines. Not any more. Now they all have to deal with technological upheaval and convergence at an alarming rate.It takes huge energy just to stay in the game. But everybody’s doing it. Everybody’s got their actions together. And now they’re …

Interchangeable. For all this work, all this energy, all this time, money and upheaval, most consumers see telcos as being as good as one another. A no risk swap.

Telcos haven’t helped the situation. They’ve been so busy being busy that they’ve lost the art of engaging their customers. Many of them have lost sight of the customer completely. People have been reduced to billing units. Airlines have done the same thing. People have become load factors. Insurance companies too have lost it. They’ve reduced people to policies. Banks have turned people into accounts. When you’re so busy doing, it’s easy to take your eye off the real reasons you exist.

The more these unthinking actions happen, of course, the more the company’s real value to the consumer recedes. Little wonder then that customers churn and market share declines. Faced with these threats, companies take more action. They respond by dropping prices and peddling faster to try and stay where they were. They do more. And so does everyone else.

And the faster they go, the faster they need to go. Speed necessitates actions, but they are actions predicated on no time to think. Everyone’s peddling madly, but in reality, in the words of art collector and sage Jim Barr, “the wheel’s still spinning, but the hamster’s dead”.

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This is your captain speaking …

Just over six years ago, I wrote a post about the futility of pilot announcements. In it, I asked:

“Why do pilots always insist on giving us details of the flight plan and our intended altitude? Because, to be perfectly honest, I don’t really care how high we’re flying or the course we’re taking – just as long as we get there. I just need to know they’re present and correct, and in an appropriate state of body and mind to do their job. And besides I have no way of knowing whether it really is 27,000 feet or not, so what’s the point in telling me? …”

Every brand would like to tell their audience more about what they do. They like to think that explaining in detail how hard they work and how much they know quantifies the value they add. But what it really amounts to is the brand having a “conversation” with its customers on terms it feels comfortable with.

It’s smalltalk, disguised as information. The pilots probably aren’t iinterested. They signed up to fly. You’re probably not interested. You paid up for a seat. But it happens anyway – because somehow the airline’s not happy with silence (it seems unfriendly) and the passengers understand they can’t actually ask to just be left alone please (which might also seem unfriendly).

So in reality both parties are probably engaged in an exchange that neither genuinely wants but both feel compelled to have.

So here’s my two questions for the next time you’re thinking through how to differentiate your brand experience. What “experiences” do customers get from your brand because you feel comfortable delivering them? And what do they not get that they would actually like?

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New article: 5 things to do when social media reacts to you

Imagine being flashmobbed. Suddenly hundreds of people run into your reception area with chocolates and flowers and sing a song in your honour. What would you do? Or a crowd appears at your company’s gate and each person there shakes their fist and jeers everyone entering the building. Then, just as quickly, they’re gone.

It happens a lot. To firms all over the world. Not literally of course. On Facebook, on Twitter, on YouTube. Brands are hit by a wave of emotion, good or bad, that rolls in, and then recedes, leaving everyone affected breathless and confused.

What the hell just happened?

The force at work is “critical mass”: the impact that many, many people can have when moving together, with purpose, towards a singular point. It can last minutes, hours, days. It can generate smiles and business, or scandal and significant losses. It can transform people and brands into heroes or villains, celebrities or scandals.

Whilst I think a lot of us continue to search for a credible return on investment model for brands employing social media, there is no denying the ability of social media, on occasions, to galvanise people – and there is no denying the huge effects that such gatherings can generate. These channels can bring together consumers from many places to form a significant mass of opinion, in support or against, based around an issue they consider important to them. And they can do so like no other communication means before them. Hence the “mass”. The “critical” components are that participation usually comes with some strong opinions, and your reaction to that influx can be make-or-break. Continue reading to find out whether to step up or step back.

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Does sponsorship actually work? Driving up likeability through association

Does the passion and commitment that fans feel for their favourite sports and events carry across to the sponsors who often help make such events financially feasible?

Previously I’ve examined how advertisers have woven their participation into the very fabric of Superbowl Sunday and contrasted the sentiments that such engagement enjoys with other sponsorship arrangements where brands are much more sidelined. I’ve also looked at Dow’s involvement with the upcoming London Olympics.

Now Kirk Wakefield, Professor of Retail Marketing at Baylor University in Texas and Anne Rivers, Senior Vice President at Brand Asset Consulting in New York, have studied the relationship between brands and fans more closely by looking at the effect of official sponsorship on key aspects of the brand relationship

Using key sponsors from the NFL, they’ve looked at what role sponsorship plays in brands achieving knowledge (how well the brand is understood), esteem (how well regarded the brand is) relevance (how appropriate the brand is seen to be), and differentiation (how distinctive the brand is in its point of view from competitors) among the sport’s fans versus non-fans over the 2008-2010 time period. What the two brand practitioners were particularly keen to examine was whether or not sponsoring brands achieved any advances over their competitors. You can read their paper on this here.

Their out-takes are that:
1. Passionate fans are much more drawn to official sponsors than less passionate fans.
2. Consumers who consider a brand relevant will try it, particularly if they are encouraged to do so by sponsors via multiple touchpoints.
3. Greater esteem leads to greater preference and loyalty.
4. Sponsorship increases familiarity, which in turn leads consumers to believe that they really know a brand.
5. In this particular case, over time, official sponsors of the NFL improved their brand positioning against their competitors, underlining the importance in the minds of the authors of continuing longer term contracts to build the effects and benefits of linkage.

So the opportunities are there for brands involved long term in sports that attract passionate followings to substantially increase their equity amongst that community – assuming of course that the fan base is big enough and committed enough to carry their enthusiasm through to active support, and that the brands themselves have continued their association long enough for their participation to register.

Gary Belsky, whose Time post first alerted me to this story, says that the link between sponsorship and purchase from fans make sense because, to quote Daniel Kahneman, the brain uses many non-conscious shortcuts to help us get through the many decisions we need to make every day. When we’re faced with choices or questions where the answers aren’t immediately obvious, we substitute the difficult question with a simpler one and answer that. Our response to official sponsorships, Belsky surmises, probably involves substitution. We go for what we think we know. We rely on the association principle that if a brand is good enough to back a much-loved sport, then it’s good enough for us. “We’re looking for easy answers to the simplest questions possible,” explains Belsky, “and more often than not the question “Who’s the official cell phone company …?” is easier to answer than “Which cell phone plan is best for me?””

While Wakefield’s and Rivers’ paper draws some interesting, if perhaps unsurprising, conclusions, what’s missing for me is the money-shot (which to be fair, the authors may have actually revealed at the Conference itself), and that is whether a NFL sponsor forking out perhaps millions of dollars a year can directly attribute a significantly profitable bottom-line return on that investment. Does sponsoring a major event pay for itself or do brands simply experience an ego-boosting rise in sentiment? Does all that knowledge, esteem, relevance and differentiation translate directly into trackable converted sales?

Looking further afield, a paper by Jin-Woo Kim, a PhD student at the University of Texas, on the worth of sport event sponsorship, published in the Journal of Management and Marketing Research, seeks to correlate the effects of sports sponsorship in terms of consumer psychology and financial returns. From his study of a number of other events, Kim concludes, “sports sponsorship is one of the best ways to build a communication path toward consumers (Buchan, 2006) … Unfortunately, not every company sponsoring World Cup and PGA enjoys significantly positive cumulative abnormal returns but the short-term financial performance can be enhanced by brand value. Product fit was identified as a potential driver that enhances short-term financial performance.”

So:

  • Reaching people through their sport is highly effective (for all the reasons outlined in Wakefield’s and River’s paper I would suggest)
  • Brands will see very different direct financial returns from their involvement. Those most likely to see the best return are those where their product aligns as directly as possible, physically or emotively one presumes, with the event they are sponsoring.
  • There’s a good chance that those brands that don’t see a direct shift in the short-term financially may see a lift in their overall brand value over the longer term (which sounds to me a bit like the fund manager’s promise that if you stay in the market long enough and keep investing, one day you will see a return).

All of which suggests that achieving brand likeability through sponsorship is a relatively inexact science. One that you can skew in your favour however if you:

  • Target specific, presumably segmented audiences (that you cannot or do not reach any other way?)
  • Look for ways to engage with those audiences in, around and beyond the event itself
  • Directly align what you offer with what fans of the sport/event enjoy
  • Provide clear calls to action that fans can take, again in, around and beyond the occasion that then bring you revenue (Wakefield and Rivers give an example of how Dunkin Donuts have made drinking one of their iced coffees a key ritual at Red Sox games)
  • Reinforce your passion as a brand for the sport/event that your target audience are committed to, and link it back to what the brand and the audience share. This provides a common worldview as the basis for a relationship.

Breaking the habit of dissent

Blair sent me this great story about harnessing the power of habit from NPR. It includes an explanation by business reporter Charles Duhigg from his upcoming book “The Power Of Habit” of how companies have successfully altered people’s habits by tapping into what the author refers to as the “habit loop.”

According to Duhigg, this loop has three parts: the cue, which triggers a behaviour; the routine, which is the behaviour itself of course; and the reward, which is the signal that goes to the brain to store this habit for future use or not.

Duhigg also talks about when Paul O’Neill took over as CEO of a dysfunctional Alcoa. By focusing on worker safety and the dangers of inefficient manufacturing to workers, O’Neill found a way to get everyone on the same page. He went on to build a highly profitable and efficient company.

The story serves as a reminder that a change in culture only takes place when you achieve a change in mindset; when you break what Duhigg calls a “keystone habit”.

So many companies instigate change programmes that demand the workers make all the changes. The lesson from O’Neill, highlighted by Charles Duhigg, is that you should always begin with an act of good faith that puts people on side with you. When people are there, when they have broken the keystone habit of simply disagreeing with you because that’s what they’re used to doing, then you have a situation where meaningful and sustained change is much more conducive.

If you really want to transform a dysfunctional culture into a purposeful brand culture, start by discussing and changing for the better the things that matter most to your people. Then, and only then, should you ask them to make changes for you.

Thanks Blair for the pointer.

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Strategy, or resource budget?

strategy

Strategy? (Photo credit: Sean MacEntee)

Why have management teams reduced strategy to a compliance matter – something they go away to do once a year. Some have even invented a host of reasons why they can afford to take strategy off their list of tasks. “Strategy is a talk-fest.” “Strategy isn’t real.” “Strategy isn’t practical.” “Strategy is just a fancy name for planning.” In so doing, they have overlooked the creative, pre-emptive and competitive opportunities that great strategy should go looking for.

In an interview with McKinsey Quarterly in November 2007, Professor Richard Rumelt of UCLA’s Anderson School of Management, says most corporate strategic plans don’t deserve the name. Far from being strategies, they are actually three-year or five-year rolling resource budgets tied to a market share projection (designed, I imagine, to appease shareholders’ demands for dividends). Calling this strategic planning, Rumelt says, creates  false expectations that the exercise will somehow produce a coherent strategy.

Amen to that. Great strategy is not about all talk and no action or the talk before the action. I  don’t think it’s about just talking at all. Strategy is about seeing. It’s about visualising the company that you most want to run, and that your customers would most want you to be, at the point in time when that aspiration is most likely to be most effective. And then it’s about calmly, clearly and ambitiously thinking your way forward based on what you see. Along the way it’s about continually challenging everything you take for granted. It is, as Rumelt asserts, about delivering a clear pathway to substantially higher performance, something that “resource budgets” simply can’t do.

Last year, Rummelt’s new book Good Strategy/Bad Strategy  expanded on another  idea he coined in 2007. He summarised his key points from this book in another McKinsey publication in June 2011. “Bad strategy”, he says, is what happens when strategists go for the buzzword approach at the expense of differentiation. So there’s goals and ambitions and visions and missions – there’s just not a compelling and competitive approach to overcoming a defined and qualified challenge. “If you fail to identify and analyze the obstacles, you don’t have a strategy. Instead, you have a stretch goal or a budget or a list of things you wish would happen.”

The key causes of bad strategy in Rummelt’s view? Mistaking goals for strategy, bad objectives and obfuscation … caused by indecision and a templated approach to strategy.

The other problem with many strategic plans of course is that so many don’t include checkpoints. The actions run until the plan finishes, then more numbers are drawn up, and new actions start. Context, contribution and competitiveness – or the lack of them – go unchecked. A failure to solve any of the articulated problems or achieve any of the stated goals is greeted with a collective shrug of the shoulders and another management retreat to figure out what to do next.

And it’s not a once a year thing either. I’m with Rumelt in believing that strategy and its development should revolve entirely around opportunity. Every company, he suggests in his 2007 paper, should have a separate, non-annual, opportunity-driven process for strategy. In other words, strategy should  be cued by  conditions – and those conditions don’t necessarily just fall on a given number of calendar days when a favourite conference centre is available.

For me, the most important thing about a strategy is that it is very clear – about what’s faced, what’s needed and what success looks like. So, a clear strategy in my view has five aspects:

1.     A specific dilemma, challenge or opportunity that the organisation faces

2.     A detailed explanation of that situation, including an exploration of what has happened, who is leading it, what their motivations might be, where it might lead,  and those parts of that situation that pose the greatest threat and the greatest opportunity

3.     A distinct and articulated goal that resolves the dilemma or challenge, or maximises the opportunity

4.     A differentiated, on-brand approach to achieving that goal

5.     Actions within that approach that are specific, measurable, budgeted, resourced  and yet flexible enough to be adapted if the situation changes

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Know thy enemy

I’m a great believer in brands having enemies. Here’s why. Enemies draw people of a common mind together. Enemies activate people to want to do something. Enemies provide a clear and present focus.

Your enemies are not competing brands. Well, not directly anyway. Your enemies are the ideas that compete with, or conflict with, your purpose – specifically, they are ideas that run contrary to what your brand believes in and aspires to.

An enemy could be another belief or an assumption. It could be an action or a way of working. It could be a state of the world. It could be a system. It could be an injustice or an intolerance. Whatever it is, it is something that your brand fundamentally opposes and want to change because your values dictate that it is necessary for you to do so.

Tom’s has an enemy: bare feet. A fundamental tenet of the Tom’s brand is that it is unacceptable for children not to have shoes. Apple has an enemy: mass produced boredom. As a brand that lauds individualism, Apple is appalled by anything that is unexciting enough to appeal to anyone. Google has an enemy: things that can’t be found. It runs against everything they are striving to achieve.

If you are clear about what you believe as a brand, you must also be clear about what you don’t believe and what you find unacceptable. The thing you as a branded culture collectively hate the most, and that everyone else around you seems to accept or even encourage, that’s your enemy. If you and all your competitors agree that something is unacceptable, that’s not an enemy, that’s a standard or a consensus or an industry opinion.

Differentiated brands have distinct enemies. Enemies that galvinise consumers because they too want to see an end to the thing you’ve declared war on. No other shoe company is as adamant about bare feet as Tom’s. No other computer company is as appalled by boring technology as Apple …

Give your people something exciting and inspiring to come to work for. And at the same time, give them something unforgiveable to work against.