MANAGEMENT.

The iPod is a textbook case for strategy. The strategic opportunity was presented by a flawed tactic of record companies and the failure of both record companies and the electronics industry to understand a new medium: the internet. Sony had the right foresight that both media and hardware will have to converge into one experience. It also acted on this foresight by acquiring media companies early on, but ultimately failed to pull its media and electronics assets together.  

The iPod took over the glory which until then Sony's Walkman held. It was Sony's engineering-driven culture under the visionary leadership of Akio Morita which made Sony the undisputed innovation leader in the seventies and eighties. He mobilized listening to music - the Walkman made it possible to get up from your chair and out of the room while listening to music. 

Apple added a crucial feature which would make the iPod the successor of the Walkman: It exploited the failure of the recording industry to provide a timely and consumer-friendly way of obtaining music. While the large recording studios, unable to come up with any new business idea, were wasting their time to track down and sue music downloaders, Apple offered both the hardware - iPod - and the software - iTunes - to make downloading and listening to music a hassle-free (and legal) experience. 

The strategic opportunity, exploited by Apple, was not only presented by the fixation of the recording industry on tangible recording media (first gramophone records, then tapes, then CDs), but also by the inability of the electronics industry to take on a problem the recording industry was unable to solve. 

The tactic of the gramophone industry, for most of the 20th century accustomed to to easy profit through tangible recording media, was to entrench and attack their own customers. After spectacular raids in the apartments of teenage music downloaders, the mere idea of Internet delivery as an alternative to tangible recording media was made a forbidden thought, effectively making it impossible for the recording industry to innovate and embrace the Internet as their next delivery channel. 

For electronics companies it looked too risky to take on the powerful recording industry. And for Sony electronics, the number one candidate to come up with a meaningful successor to its own Walkman, an iPod-like device would have felt like an attack on its own nest, because Sony had both: electronic devices to play music and content studios. Betting on convergence, Sony had acquired CBS records in 1987 (now Sony Music Entertainment), and Columbia Pictures in 1989 (now Sony Pictures Entertainment).

That sounded like a good idea in the late eighties: when you can offer both the content and the device, you couldn't go wrong, so the idea went. If there just wouldn't have been the Internet. That meant no walk to the record store, no shelves for records, no scratches in gramophone disks. (The Internet was around in the late eighties, but took off only after 1995.)

Apple was not an electronics company, it was not a recording company, but it was good in designing and matching hardware and software. After all, it was exactly this insistence on doing both the hardware and the matching software which made them the victims of Microsoft (which got big by taking a Graphical User Interface, earlier developed by Apple, and licensing it to Asian manufacturers). But that was during the last century.

The vision of Sony's previous CEO, Noboyuki Idei, was Sony as a convergence company. He rightly foresaw the importance of uniting content and delivery, hardware and software into one experience. During his reign, Idei fought against a company culture which was in the meanwhile petrified in the engineering mindset which had served the company well in its earlier years. Idei perhaps wanted Sony to become something around the lines what Apple is today. To that end, he even broke with an iron law of Japanese corporate culture and chose a Westerner as his successor.

Idei might have thought that choosing a new chief executive from a gramophone company would advance his idea of convergence. But this was the very same industry which, through its refusal to innovate, opened the strategic horizon for Apple. Howard Stringer, previously having worked 30 years at CBS, took over in 2005. Since then, Sony cut visionary developments. Sony cut jobs. Today, Sony is losing money. And while Sony was acquiring Ericsson in a bet for the mobile phone market - without much success - Apple worked on the iPhone, the product which was to redefine the mobile communications industry. 

Since 2005, Sony is worth a quarter less (-24%); Apple, on the other hand, is worth over five times more (+560%).

What are managers, what are they supposed to do, and how? We can find out a bit more when we look at the root of the word management. The English term "Management" is coming from old French "ménagement", meaning "conducting", "directing". The contemporary French "ménage" stands for Housekeeping. Management, then, is directing, and it has to do with good housekeeping. There are two word roots in Man-age-ment: "Man-" and "agere". The first, man-, comes from the Latin "manus", meaning "hand". This comes from Sanscrit "ma", there meaning "measure". "Manus" is the hand, our tool for gestures (orchestra conductors use their hands to direct their orchestra) and expression. The hand is used in fight, thus the Latin manus is often used as "bravery". In Latin, manus is also an artistic hand and as such can mean "the finishing touch". 

The Latin word manus is also the designation for a unit of war, a corps, and generally an organisational body or company. The meaning of manus contains another important insight here: The military corps is the "hand" which executes a military strategy, and similarly a company is understood as the "hand", the organ which executes a strategy and intent. The hand gestures and the hand makes. The latter is contained in "Manu facta" - the root of "manufacture". There is always the danger of overdoing, and so manufacta can be used as "overdone, artificial, fabricated" such as in "oratio manu facta" (oratio = speech) - an overdone, artificial speech.

The second root is the the Ancient Greek "agô"- to carry, convey, bring. In Medieval Latin, ago means "to set in motion, to drive". There it has a multitude of uses such as in se agere - "to set oneself in motion", or simply "to go". "Hoc agere" (hoc = this) then means "to attend to the matter at hand". The word agere converts some preceding nouns to action: It means "to express thanks" when attached to "gratias", when attached to "pacem" (pace = peace) it means "to keep the peace". Agere would also be "to deal with" and can also mean "to take a matter up publicly", "to incite to action", and "to be concerned".

Management combines manus, the directing gesture, with agere, setting into motion. In manus, there is both the meaning of leadership and bravery. In agere, there is the meaning of conveying, pointing at the vital need that managers must be communicators.  

Copying is a learning route to innovation. When I published my first article dealing with the topic in 2001, this seemed to be a counterintuitive idea to most. In another article in 2005, I proposed a model of development phases after the imitation stage. And indeed we have now reached a live example of a transition to the next stage: Chinese copies do not any more compete by price alone, but start to compete by new features.

Let us look at an innovation. There is a "long nose" in which the innovation brews, but does not quite reach a critical mass. Bill Buxton states the example of the mouse:

"Think of the mouse. First built in around 1965 by William English and Doug Engelbart, by 1968 it was copied (with the originators' cooperation) for use in a music and animation system at the National Research Council of Canada. Around 1973, Xerox PARC adopted a version as the graphical input device for the Alto computer.In 1980, 3 Rivers Systems of Pittsburgh released their PERQ-1 workstation, which I believe to be the first commercially available computer that used a mouse. A year later came the Xerox Star 8010 workstation, and in January, 1984, the first Macintosh—the latter being the computer that brought the mouse to the attention of the general public. However it was not until 1995, with the release of Windows 95, that the mouse became ubiquitous."

So there is a potentially long time in which the next hit is, in some form, already around (but you likely don't know). Then the innovation reaches critical mass. And then follows the long tail.


What I call the "coathanger" model of innovation combines the long nose, the innovation peak, and the long tail

In the "long nose" there can be several attempts, sometimes in different markets. Here the innovation is in the waiting. The boost comes along in the form of a change in the market environment. This can be 1) an external economic factor, such as he oil crisis of the early seventies which boosted fuel-efficient Japanese cars. This can be 2) another, previous innovation which changed the playing field so that a follower innovation can take place, shown at the example of Windows 95. Or it can be 3) a latent demand condition - an innovation which taps into a latent demand. This is the route to innovation which does not intrinsically depend on external change or another innovation - it sees a latent opportunity and changes the market by itself. The iPhone is a single product which out-innovated the telecommunications electronics competition and is now the dominant design for others to follow.

Innovations change the market environment and make way for other innovations: Windows 95, for instance, changed the playing field for computers worldwide, but was itself a follower innovation emerging from the long tail of the Macintosh. The Macintosh served as an inspiration, and Microsoft changed a fundamental feature: It was made available without a the need for a corresponding piece of hardware. This difference proved crucial, as it allowed Asian manufacturers to mass-produce computers with a useful GUI by simply licensing Windows.

In the long tail, the innovation changes the playing field and results in a multitude of derived products and services. There are principally three routes: Enhancing, competing with related products, and copying.

For enhancement to work, there must an option provided by the innovator to enhance the original (for the iPhone this would be the "made for iPhone" tag or the iPhone apps): This works as long as the secondary producer agrees to the rules set out by the original producer/innovator. If this is not available, or it appears preferable to compete, there will be a competition with related products. These are the related products which have been inspired by the original innovation and need to offer alternatives to compete with the original product: Since the arrival of the iPhone, competing manufacturers came up with similar products such as the Sony Ericsson Ixperia, BlackBerry Storm or Samsung i900. The chance to achieve a follower innovation is only given when competing with related products, although to get there the related product will need to provide a fundamental advantage - a mere tweak of the original will not do. And then there are the copies: Despite being in theory illegal, they usually compete by much lower prices, or, as recent developments show, by new features.

For copies, the price route- think Rolex fakes - works as long as the market knowledge is underdeveloped and a clone is easier accepted. This route is still taken by many smaller producers in China who target developing countries where consumer knowledge is lower. The more interesting clones compete by features. There is an array of Chinese iPhone clones, some of which have features differing from the ones provided by the original: For instance, one has a dual SIM card slot, ideal for people who frequently travel and want to avoid roaming fees.

The iPhone clones' new features do not yet fundamentally improve on the original. Rather the opposite, they struggle with details. Remember, the iPhone was out-innovating the Nokias and Ericssons not because it provided even more additional features, but because it radically improved on user interaction by removing clutter. It is not only the hardware, it is the combination of hardware - also the original iPhone is assembled in China - and smart software which makes it such a pervasive product. Still the iPhone clones which compete by new features are creating new, sometimes local niche markets in the long tail.




iPhone clones: Meizu, iOrgane, CECT Dual Sim, HiPhone, SciPhone.

Although there are more and more designers, products with design quality are hard to come by for most consumers on the globe. This is because developed design capability is not where there is production capability - an important observation, considering that design products are the largest chunk of creative industry exports worldwide. In Europe, where design is getting recognized as an important corporate asset, there is little large-scale production capability left, while it will take some more time once China has a design capability to match its massive industrial output.

For premier companies, design is considered a vital corporate asset which has to be protected - not least as these companies have substantially invested in design. These pictures illustrate part of the problem: Chinese car designs, looking quite familiar.

Bayerische Motoren Werke, Munich, and Shaanxi Qinchuan Auto (Build Your Dreams), Shenzhen

Since many years, Chinese companies are aware of the appeal of Western, but also Korean and Japanese brands and designs for Chinese customers. Approaches are mixed: Lenovo bought the IBM hardware business mainly for its tech know-how, but got the valuable IBM brand name rights only for a few years. British carmaker Rover's remains was bought by Nanjing Auto, while competing Shanghai Auto got the design rights of two Rover models. The Rover brand however, it's most valuable asset, went to Ford. Chinese companies until now shopped for foreign companies mainly to boost their technical know-how and seem to have underestimated the other main factors for attracting global consumers: Design and brands. Not having gotten the Rover brand, Shanghai Auto is now selling the Rover 25 and 75 models under "Roewe" - the Chinese pronounciation of Rover.



Global brands such as BMW have a substantial image and design edge over home-made Chinese products with local Chinese customers, a similar problem Korean industry faced with local consumers when opening its market in the nineties. Korea invested heavily in design - and now has both locally desired and globally recognized brands such as Samsung and LG.

Some Chinese companies are getting aware of the importance of design, such as Gangzhou-based GAG, which started to develop a - kind of "not intended for production"-looking - prototype with a young car design studio in Shanghai. Above-mentioned Shanghai Auto also recently came up with a new "Roewe" which was designed and engineered in Britain and is not based on the old Rover designs. Also Chinese brands Geely and Chery did show new concept cars. There is no defined identity or design language yet, but it is a start for Chinese companies to understand the importance of developing design capability. Early learning in design, especially in Asia, works via imitation - see also my articles Alchemy of Cultures (2001) and Imitated, Commodified, Experienced (2005).

The first Chinese companies are now moving from the imitation to an exploration stage, where many different design approaches are tried in a quite chaotic manner. Eventually, they will move to state of synthesis and dominant designs will appear. As can be seen in Japan and Korea, this is not a linear process; it is rather a learning loop, where outer influences repeatedly play a role - see for instance the LG Prada phone, the first co-branded phone with a fashion company, and Samsung's later Armani phone. Samsung also presented it's own iPhone-inspired product.

LG Prada phone, Samsung Armani phone, Apple iPhone, Samsung F700

On the road towards the knowledge economy, many developed countries have also developed design capability. At the same time, industry has steadily declined, not least because of cheap competition from Far East. Design capability is now concentrated in the North and West of the globe, while production is concentrated in the South and East.

Will all Europeans and Americans become knowledge workers, while the Chinese are merely producing the knowledge output of the West? Not likely. I think that on the long term the situation will become equalized - some production (for instance in the area of green technology - the next industrial revolution) will need to come back to the West, while the East will pick up in design capability.

In the meanwhile, designers need to orient themselves more globally, and national design organisations in developing countries need to open their markets to international designers. I doesn't make much sense when talented Western designers in the current economic downturn struggle for local commissions while at the same developing countries need the injection of talent. Designers need to think and act globally.




Some are ahead already: Tata, the Indian car maker which came up with the remarkable Nano, a more convincing (and much cheaper) micro-car solution than Mercedes' loss-making Smart, will soon tap into the talent pool of London by opening its first international design studio there this fall. Expect Smarter and better designed cars - made in India.

There are not only brand and product life cycles, also design is subject to life cycle phases which, when strategically deployed, add value.

More radical, innovative designs are most useful in the introduction phase. Once a brand or product is in the maturity stage, the target will be the majority of consumers in the middle of the bell curve, so designs are usually more toned down to appeal to the mass market - think HP or Dell. But is that the right approach?

There is always the crucial element of innovation required to keep a product in the loop, which might be lost when a company is focusing too much at the middle of the bell curve. Companies in mature industries often have a difficult relationship to innovation. On the other hand, innovator companies are often having trouble accessing mass markets.

The issue is the “chasm”, as Geoffrey Moore calls it. This chasm is bridged only by a handful of masters of the life cycle such as Apple. The trick clearly is to bridge the chasm, to be innovator and mature player at the same time.

The German Design Council and Zollverein School for management and design created a new Executive Education series: "Professionalising Design" is targeted at executives in the fields of design, product development and marketing.

On June 28th I will be talking about the essentials of the design briefing. Other speakers in the series include Roland Heiler (Porsche Design), Hartmut Esslinger (frog design), David Kuntzsch (ERCO), Hermann Steger (Dornbracht), Mirko van den Winkel (Moroso), Andrej Kupetz (German Design Council), and Ruth Soénius (Siemens). Attendence is limited, grab your seat here.

Your future starts here, German Design Council and Zollverein School of management and design, Essen, Germany, June 28.

Bogazici (Bosphorus) University, the premier University of Turkey (with a fantastic location right at the Bosphorus) and the Bogazici University Economics Club will host the anniversary 10th Brandmarker International Student Congress on Marketing Communication. Topics will be branding, socially reponsible marketing and interactive marketing.

I will be giving a lecture and conduct a creative session on June 19th. Other speakers include Alemsah Ozturk (41-29), Levent Erden (Euro RSCG), BJ Cunningham (Georgina Goodman), Salim Kadibesegil (Orsa), Annelies Poolman (Amsterdam Global Conference on Sustainability and Transparency), Daniel Levine (Avant-Guide) and Hansin Dogan (United Nations Development Programme).

Brandmarker International Student Congress, Bogazici University, Istanbul, Turkey, June 19.

Since 2000, allevio design has changed quite a bit. It started out as a multidisciplinary design studio with an edge in interactive design. Over time I moved the focus to design strategy and trend research. To gain creative independence from day-to-day commercial projects, I also started a range of projects envisioning the future - such as project 4391, parallel places, and mnemonic metropolis. Finally, in 2007, this has become a different company, and thus it has now a different name - mg strategy.

Whats in the name? mg are my initials, and, incidentally, the abbreviation for a special type of strategy - the minority game strategy, a nice and simple model with adaptive rules, yet complex behaviours (in which the players on the minority side win).

The new mg strategy website is now online at mgstrategy.com.

A bit of background about the new web structure: The former websites of allevio design, allevio.com and ixperia.com, are now pointing at the same content at mg strategy. The semantic database content such as the semantic pianist at ixperia.com has for now been scrapped.
Much of the content at allevio was carried over to the new site, although some was scrapped as it seemed not relevant anymore. The resources have been increased from 7 to 21 downloadable papers and presentations. All publications come in PDF, all presentations in Flashpaper. The section about explorations in interactivity was streamlined to contain 6 redesigned interaction experiments, and the project "architecture by algorithm/ mnemonic metropolis" was updated with a new flash presentation.

About Trends (PDF, 430KB) is an introduction to trend research and forecasting.

What actually are trends? This paper attempts to illuminate trends from viewpoints of cognitive science, psychology and sociology and introduces the trend domain model as a guidance for trend researchers.

It was first presented at the Product Development and Management Association, London 2003, and the Design Management Institute´s European International Design Management Conference, Barcelona 2004.

A new idea? Great!
A flowchart to avoid innovation.

That might be a reason:





In 2002 I was researching the aims and motivations of business managers and designers and found them to be rather different. I also found that there is an overlap which is a "natural" starting point for a constructive conversation between the disciplines.

Since some time the design management discourse is increasingly assuming that all design has to be simply subordinated to the aims of business management (the left part of the diagram above). At the same time, values not intrinsic to business (the right part of the diagram) have been increasingly squeezed out.

This lack of non-business values is exactly what social and environmental activists criticize. Design would be ideally positioned to introduce just that.

Alas, that won't happen as long as the current discourse in the discipline of design management itself does not recognize that there is more to design management than management alone: There is also design in it.

Companies seem to have understood that brands are good for business. But instead of adding value by brands, companies often manage brands in ways which undermine brand value. Have managers understood what brands actually are? What are the reasons for this behaviour, and what can be done to improve the way brands are managed?

This article is also available as PDF in Spanish, published by Identico:
”La marca es... Conceptualizando y creando estrategia de marcas: Cómo influyen las metáforas de marca en su gestión”

Four metaphors: The brand as property, projector, wrap, and specific

In the old German tale „The rat catcher of Hameln“, the rat catcher finds a way to lead all rats out of the city by playing a flute so seductively that they all follow him in streams. Advertisers often sell the brand as the magic flute, a hypnotic force which makes people go far for that one fabled product. So, is that the brand, the flute playing the right tune? It can be imagined as a sound, as a tune, driven by the feeling of the flute player and his knowledge to play the right notes. Thus, in a way, yes. But in other ways, no. People can be seduced by the brand tune only as long as the product experience holds its promise. But the tale from Hameln points to a crucial point in another important way: Conceptualizing and understanding something is an intrinsic metaphorical process.

People conceptualize through metaphors all the time. „Success“, for instance, is always conceptualized as a dimension in space: „up“. Failure is the opposite, conceptualized as „down“. You might go „up the career ladder“ or „down the drain“, but you don´t escape the metaphoric conceptualization that the ups and downs of life are directions in space. Metaphors are, in fact, so pervasive in our daily lives that we do not realize how much they frame our thinking. Metaphors are deeply embedded, cultural concepts with a characteristic trait: They point out certain contexts just in order to obstruct others.

In an economic environment where the access to the means of production is open to everyone, one of the few remaining qualifiers for business is the value proposition for the customer, embodied in its brand. Building, successfully managing and sustaining brands are consequently of prime importance for management. But the real-life management of brands turns out to be governed and biased heavily by the way managers conceptualize and understand brands, often with harmful consequences for the corporation.

So what are these ideas? By having a closer look at common expressions and actual behaviors, I have identified four commonly employed metaphors of brands which, all in their own way, produce detrimental effects on the management and utilization of brands. These are misconceptions which in their consequence often undermine the credibility and sustainability of the same brands they mean to support. I will also be contrasting these to another metaphor which, I hope, should be more helpful for brand management.

In the metaphor „The brand is a property“, the brand is understood as a logo, mark and name. Here the brand is a prescribed space which is owned similar to land. With this view, companies often legally defend their mark, name and logo, also when the context in which the brand is defended has little to do with the consumer´s view of the brand. An example would be the affair of milka.fr: A French tailoress named Milka who ran a simple website promoting her service was sued by the chocolate brand Milka and finally had to hand over her web address by French court order. (In a similar court ruling in the US, a Mr. Gopi Mattel, although he had changed his previous name to Mattle a few years ago, could keep his web address mattel.org against Mattel, Inc.). In the „The brand is a property“ metaphor, brand value is understood as the accrued value of the brand property. Much attention is given to tangible representations of the brand in heavy corporate identity manuals. Meticulous compliance with prescription-based brand manuals is seen as paramount, often to the detriment of the core brand idea.

In the metaphor „The brand is a projector“, the brand is conceptualized as a device projecting an image on a blank screen. This concept makes the brand appear as though it is able to project any image seen as appropriate by the brand owner. Managers employing this metaphor usually spend most of their brand budget on advertising and communication, reckoning if they just project long enough, then the brand image will over time become burnt in. The brand is essentially understood as being referred to by the image it represents. It is assumed, for instance, that a name and advertisement campaign with certain attributes will make people think that the company behind it also has these attributes. That is, however, not true in our everyday personal experience. People are apt in distinguishing between signifier and signified, discerning between name and perceived character trait. Just because, let´s say, Julia has a nice name and a pretty dress, does not necessarily mean that she is a nice person.

Brand changes often fail when they are built on the projector metaphor. The “blank screen” concept contained in the projector metaphor tends to make brand managers ignore existing, established values, and the “one-way” idea contained in the metaphor makes them underestimate public reactions – after all, screens usually don´t object. For instance, British Royal Mail´s brand change to „Consignia“ was met with wide public disapproval as it ignored the strong existing core values associated with Royal Mail, and consequently it had to be reversed. Where a blank screen was assumed, there was, in fact, a big picture with a long history. Similarly reversed was the brand projection of the famed consulting business of PriceWaterhouseCoopers as „Monday“.

A related common metaphorical conception of brands is „The brand is a wrap“. Here the brand is conceived as a mask, a device for appearing in a different way. This thinking is at work, for instance, whenever corporations change their brand name once the company runs into a public relations trouble. Examples are Philip Morris, the cigarette and food producer, who changed its name into Altria, or Jarvis, the contractor at the focus of the enquiry of the Potters bar rail accident, who changed its name to Engenda. Here the brand is built to hide the value problems of the previous brand and the company behind it. This tactics is often uncovered by critical consumer groups, which also quickly manage to bring the new brand in disrepute.

With the property, projector, and wrap metaphor, the brand is in different ways detached from the reality of the company, product, or customer, attached instead to a logo, an image, or the illusion of the company. Resulting are situations in which, for instance, the logo and advertisements communicate a dynamic and optimistic outlook, but the actual customer experience of the company is one of bureaucratic tediousness.

While in the above metaphors the brand is always detached from the actual behaviour of the company, in a fourth common metaphor the brand is seen as embedded, but the type of embeddedness is misunderstood. It is assumed that the brand essence is embedded in a specific type of product, in a particular way of looking at the market, or in a specific way of dealing with the competition. In the metaphor „The brand is a specific“, the brand is understood as being embedded in particulars, as an indivisible part of laws guiding the cogs and wheels of the organisation and its products.

This concept– the brand is in „what and how things are made around here“ - is inevitably unfavorable for innovation, making it difficult to rethink, restructure or redesign offerings to tap into new markets. Pegging the brand at the wrong spots can severly impede the development of the organisation, essentialy depriving it of development. The example of Nokia in 2003 shows that this can be a costly misconception: After Samsung had introduced the exceedingly successful clam-shell mobile phone, the clam-shell design became a major trend for consumers. Yet Nokia refused to produce a clam-shell phone, with the result that customers switched to the competition and Nokia lost 6 billion dollars in equity. What happend? I conclude that Nokia was seeing its brand embedded in the block-type phone. They clinged to it because it was the type of phone which initially created their own stunning success in the market. Vested with this view, Nokia conceptualized the clam-shell product type as the brand of the competition, and consequently had to see it as disadvantageous to produce the competitor´s brand with its own name on it.

Relationships, contact points, and product factors

A brand, despite being mostly taken as such, is not a property, a projector, not a wrap, and not a specific. Brands cannot obtain or project their value by themselves; they are always existing in a context, obtaining value by the correlation they have with what they stand for. The brand is thus a learned association signified by a sign. The content of this sign consists of the meaning which is appropriated by consumers about a company and its products. The brand is a relationship formed by accumulated knowledge, where mouth-to-mouth promotion, rumours and myths are having at least as much impact as advertisements and targeted press releases. The most influential source of brand knowledge for customers is the personal experience with the product itself, with the customer service, or the attitude of the salesperson in the shop.

Large organizations have more stamina to launch and advertise brands. But once an organization grows beyond a certain size, a premier contact point enabler – the personal touch - is often lost in hierarchies. You might have a nice loyalty card, but when calling customer service, you mostly hear „hold the line“. After the umpteenth round of downsizing, some delivery people at the Austrian Post are still trying hard to be courteous and friendly - against the culture of their organisation.
A brand is what economists call an externality, a common corporate asset available to all. As the possible benefits of the brand are available to everyone who uses it while the costs of building and developing it are only assigned to particular departments, the common incentives to invest in brand development in a large organization are, if not supported by special policies, innately insufficient.

Smaller companies, where people can afford lasting relationships to their customers, often deliver a better brand experience then large organisations simply by way of interacting in a genuine way. There the brand is a set of information which natually holds the whole organization together, a vision driven by action: An idea every employee can accept, ideally identify with, and communicate to customers.

Douglas Nelson from the University of South Florida, researching on associative memory and adaptive network models, found that the strength of the association between a brand name and a benefit is constantly updated as knowledge of the brand is accrued, cues compete and interact. The more a brand name co-occurs with a benefit, the stronger the mental link between the brand and the benefit becomes in the mind of the consumer.

Thus the brand is ultimately tested every time the consumer interacts with the product or service the brand refers to. Yet often brands fail right there to establish a sustainable link to their consumers. Marketing departments often point to their CRM and loyalty programs. But it does not help to offer a loyalty program when the product experience was not satisfactory – after all, when something is disappointing, you don´t want to do it again, also when you get a discount for it. Therefore also even the strongest brands - Nokia was ranked worldwide number 6 in terms of brand value - cannot ignore it when customers want product types they find more satisfactory. The smaller, foldable clam-shell type obviously delivered better storage and an improved handling experience.

Therefore, actual contact points between product and customer are of paramount importance. Contact points do vary substantially between products – a mobile phone will be in contact with the customer several times a day, while that glass of Moet & Chandon will be in contact with the same customer only once in a while for a special event. The crucial elements of the brand, the time when the product or service is actually experienced, is often overlooked, although it should be the subject of great attention for brand value. The contact point perspective enables companies to focus on the occurrence and quality of interaction between customer and product. The exploration of contact points can lead to insights into major strategic options for the brand: While for a mobile phone features such as ease of use, size, responsiveness and mental structure employed in the menu will be important, the contact points in the interaction between an airline and a customer are, to name just a few, the check-in process, waiting time, or seat comfort, all of which will be offset against product factors such as price or prestige.

Contact points are defined by type and degree of interaction between the embodiments of a brand (goods and services), and customers. They are intimately connected with product factors, either as an offset or as added value. By strategically altering product factors, new strategic contact points to initiate customer interaction can be established.

For instance, customer esteem of a brand might be high, yet its products are not purchased, until a factor in the offering changes and customers do find the offer acceptable. Designer outlets tap into the large market of customers who value designer fashion, yet only will or can buy when the price factor is lower. Or producers find that to attract a new pool of customers they have to change other product factors: Perhaps the volume of an offering, as it was done for convenience food in smaller packaging quantities for singles, or the packaging design to attract a different target group.

An alternative metaphor: The brand as memory device

The brand, like a mental image or photograph freezing an image in memory, is not able to hide, or beautify, its subject, the company behind it, once the company itself is experienced. The brand, when well executed, is an image of concentrated values, a sign which refers to the essential values of a company. This mental image is a snaphot in time, which, as time passes, becomes less and less attached to its subject: It becomes memory.

This leads me to offer another metaphor: „The brand is a memory device“. This is to be understood as a mental image of an impression and an experience, always latently waiting to be updated. Advertisement can make a brand known and introduce new products, it also can give a primer for the brand experience, but the brand experience itself is ultimately formed by the interaction of product/service and consumer.
A logo can only express only that much, the rest has to be accomplished in the interaction with the customer and verified each and every time a product is experienced. The metaphor “The brand it is a memory device” contains that the brand is made of associations and knowledge shortcuts, encoded in signs and names, and embodied in products. It should also be, through shared understandings, encultured in the organization, embedded in its routines, and become embrained in the mind of the consumer.

For the consumer, the brand, as a memory device, is a mind marker which is primed by advertisements, but experienced only through contact with the actual product or service. It is a signifier which only in the mind of the consumer becomes attached and contextualized in the conflicting fields of expectations and actual experiences.

The brand is a constant, while a company evolves, if it’s for the better or worse. It must be regularly updated to reflect its signified, perhaps not exactly as an accurate picture, but as an impression which at least does not contradict its own subject. In order to update this picture, brand associations have to be evaluated, contact points and product factors of the offering have to be explored, and the way the brand connects to the company, the product, or the service has to be managed to build and maintain meaning.

As a mental image of an interconnection, it can assume a name which stands for that connection: Starbucks, for instance, is synonymous for „coffeshop“ in the US. In evoking the picture of a place for coffee, the brand is able to occupy a spot in consumers mind. Some brands even replace spoken language: Duct tape, for instance, is commonly referred to as „Scotch tape“ in the US, „Tesafilm“ in Germany, and „Tixoband“ in Austria.
This mental picture is the brand essence, the gist of a brand, not to be confused with its attributes. A Porsche does not have to be a sleek sports car, it can also be an SUV. The brand essence is a unique, entirely mental composition of promise and experience which managed to stick in the brain of consumers.

The best brands appear as a natural consequence of the essence of the whole corporation, its strategic direction, its ways of managerial execution. A well-working brand is the result of a well-working company and excellent products. Lots of badly designed and executed brands every day do ill to actually good products. But the best brand cannot cover up a messed-up company, and the brand also won´t help when the company fails to deliver on its promise. Just the opposite, it will, in everyday wear and use, expose what isn´t right. A brand does not replace real products, real prices, real people and real business processes. The conclusion: Once your company – in its strategy, managerial execution, communication and products – is set right, get a good branding company to do its work. Before that – don´t even bother.

Transcribing codes: Models for cultural fit in branding (PDF)

In this article, concepts such as the value landscape, the value
differential and the cultural prism are introduced to augment the
framework for cultural fit published in “Alchemy of Cultures - From
Adaptation to Transcendence in Design and Branding”, Design Management
Review Vol. 12, No. 4 (here)

from
Management and Design - Bridging the Gap, University of Westminster, 2002:

The views an organisation has about design will determine the positioning of the design function in the organisation. Design can be located as an own department close to the headquarters or as a sub-unit of another function such as marketing, all depending on how design is understood. For that end, Fairhead proposed a framework for organisational attitudes toward design which places design as styling on the bottom and design as a “whole process” on top.

However, what an organisation thinks about its design function is also necessarily influenced by the design function itself and how it communicates its value as well as by the idea of design as it exists in society. Design can be seen – by itself and by society – as popular or elite culture, as art, as problem-solving discipline or as a science of the artificial; Each of these viewpoints will result in a different stance of the designer towards the organisation and vice versa. While design can be seen as very different things and its goals differ from designer to designer, it is remarkably coherent in its methods. Different views and interpretations on design reflect the difficulty to see design as a wide-reaching discipline with profound effects on society, culture, environment and organisational success.

This lack of clear boundaries of the design subject matter is one of the basic problems when design is to be integrated in an organisational structure: Unlike accounting, sales or marketing, design does not have well-defined discipline boundaries. Additionally, it is usually not given status as essential discipline in business literature and curricula. Design is creative and problem-solving; it is creative in order to solve problems, and its approaches are different from the appraoches business managers are concerned with.
Design includes effects on society, culture and environment, and it can also be concerned with values such as honesty, spirituality, or character - topics which are essential for humanity, but mostly seen as distracting by management. The fact that design is both creative and problem-solving is at the core of the problem. We live by a general assumption that something is either creative - then it is artistic and should be enchanting, or problem-solving - then it is rational and analytic (as in science, or “hands-on” as in management). This results in a perceived division between art and management, between “soft” and “tough”, between “ beautiful” and “useful”. Design integrates –or at least should integrate- both, and thus “sits between two chairs” in this culturally embedded divide. However, also designers contributed to this view with beautiful designs which don´t work or else working designs which are aesthetically unpleasing.

One distinguishing characteristic of design is its radical indeterminacy even within the same methodology, opposed to the relative determinacy of natural science. Management is idealistically determinant. The lack of determinacy in design is antithetical to the determinacy of management. The crossing of boundaries of disciplines is generally difficult as long as the education system and organisational systems are fragmented and not holistic. Once a person is specialized, he loses sight of other disciplines; Only few have the expertise to reach across boundaries.

Design departments are often at the very periphery of an organisation, obliged to follow decisions made by the marketing, sales and engineering department, which in turn have interpreted the strategic direction as given by the corporate headquarters. In this kind of setup, design has limited possibilities to carry out its core skills for problem solving, as it can by way of hierarchy not redefine the very solutions other groups came up with before. Dumas and Mintzberg: “ The trouble with the chap in the long scarf (the designer) is that he may not be taken seriously; at best he is tolerated, at worst ignored. “ Having design specialists does not mean that a company will utilize them. Design which happens only after engineers and others have completed their work is just “cosmetic design”.

If design is made to have a deeper contribution to the mechanisms of business, it will require that it plays a role in core decision-making processes, that it is located not at the boundary but in the centre of an organisation.

This is mainly a question of the power and scope design is given. Erik Bohemia lists a range of answers why senior managers in Australia consider designers unsuitable to manage product development groups: They have no understanding of business, are not team players, lack of relevant experience and specific knowledge, they are impractical and outsiders, and it is simply not their job, as they are supposed to work on briefs from marketing or sales. As arguments for having designers as leaders, it was mentioned that they are multi-skilled and integrators.

If the design function is located at the centre of an organisation, it will require designers to have insight into and knowledge about business processes. In order to solve business problems in a designerly way, an in-depth knowledge of business management is however a necessary precondition. Similarly, business managers will need to have a basic understanding about the ways of design.