Questionable identity: what General Motors can learn from adaptive instability.

Anticipating and mitigating the dramatic impact of organisational inertia on transformational brand programs can help companies better cope with a constantly shifting economic environment. Just ask US car makers.

It’s a key finding from a recent study by Harvard Business School’s Mary Tripsas on the interplay of “Technology, Identity and Inertia” within a new technology company.

While there is a wealth of knowledge around the brand dynamics that contribute to forming identity, Tripsas believes the specific relationships between brand, change and technology and the impact of inertia remain unexplored.

Tripsas’ study challenges the existing zeitgeist by arguing broader brand identities impose fewer constraints on how people view organisations. She believes those with more generic brands are better able to weather a range of changing external conditions because they can align with our wider expectations of what their brands mean.

Broader brand identities and brand architecture create flexibility for a company since they enable a form of adaptive instability.

Adaptive instability works when the external labelling of a company’s brand is fairly constant but enables an internal self label which can reflect internal shifts in a brand. BHP Billiton might be “a mining company” to all of us but it currently self identifies as “a global leader in the resources industry”, reflecting a dynamic strategy. Often it is no more than rhetoric but if a brand is internally viewed as both instable and adaptive, it is able to better respond and adapt to external environmental shifts without having to make major brand changes.

While Tripsas doesn’t say how this can be achieved, there’s been plenty of evidence to support how I believe a robustly formed brand identity supported by broader purpose and positioning statements can. For example, News Corporation has been able to better adapt to the changes wrought by the internet by positioning itself as “a diversified global media company”, rather than as a single media source company.
The same approach has been taken by oil companies such as BP and Chevron in the past few years as they moved away from external “oil company” to more generic “energy company” labels. Conversely, the American car makers such as General Motors (self label: the world's largest automaker) and Chrysler (self label: we build cars and trucks) would have done well to think about how they could be morphing their brands from their focus on pure manufacturing labels to offering broader “transport” options. The prescient Honda already self labels itself as a "mobility" company.

However, Tripsas warns if a brand is too diverse it also runs the risk of not aligning with external stakeholder understanding. It’s why the UK’s EasyGroup is such a great example of what NOT to do. Unlike the diverse Virgin group of companies, which operates against well articulated brand values and personality, I struggle to understand the fundamentals of the Easy brand beyond its ability to apply an Easy prefix to any business category from rental cars to pizza. Does anyone think Coles’ owner Wesfarmers actually has a brand? As an agricultural company it probably did but now its ambit stretches from retail supermarkets to coal mines, its even rendered label-less by its own description as “a diversified corporation”.

Even the brand essence of a company can direct and constrain action and generate inertia. Tripsas defines essence as a company’s “routines, procedures, information filters, capabilities, knowledge base and beliefs” but I call it core self belief. So when an economic downturn challenges an organisation and when pursuing change to meet that challenge violates core brand beliefs, organisations often pull up short rather than face the need for what Tripsas calls “systemic, major reorientations”. You only need to look at Woolworths bungled rebranding to see this in action.

But brand and strategy are not mutually exclusive. Unfortunately most firms have aligned brand to their marketing rather than to their strategy and subsequently ahve limited capacity for change. If a firm’s brand is expressed through elements of its strategy, does this mean a change in strategy necessarily then implies a change in brand and vice versa?

Tripsas concludes brand is not just one more factor to consider when unravelling sources of internal inertia during changing circumstances. A brand is a guidepost. Where a new dynamic such a global recession requires changes to the brand, simply altering routines, capabilities or beliefs without acknowledging the broader implications can be problematic and, in some cases (back to the US car makers), devastating.

This blog was also published in Marketing Magazine Australia on 8 December 2009.

Intrusion vs seclusion: some reasons why direct marketing is failing online.

Direct marketing is failing online because brand owners, marketers and their agencies are relying on old forms of marketing, according to the latest Harvard Business School research.

The paper, entitled Digital Interactivity: Unanticipated Consequences for Markets, Marketing, and Consumers, released last month by Harvard Professor John Deighton and a Vancouver Research centre director Leora Kornfield argues that the much anticipated transformation opportunity in marketing created by digital interactivity is not unfolding along the lines of a traditional model of direct marketing.

Research like this is the elephant in the room for digital and advertising agencies and their clients, who continue to cling to the dated notion that consumers (of all kinds) really do look at this stuff and believe that digital based direct marketing is both cost effective and really has a demonstrable ROI.

Deighton and Kornfield argue that under the old model digital media would use the rich profiling data it gathers to create more penetrative marketing messages which would go more deeply and more precisely into consumer lives than broadcast media had been able to do.

Instead, they claim the threatened intrusion is actually delivering seclusion.

“The transformation is unfolding on a model of consumer collaboration, in which consumers use digital media that lie beyond the control of marketers to communicate among one another, responding to marketing's intrusions by disseminating counterargument, information sharing, rebuttal, parody, reproach and ... fandom” (they might be meaning Apple here or eBay’s newly created Neighbourhoods), Deighton and Kornfield said.

They describe marketers in peer-to-peer environments as an ”interloper, more talked-about than talking” and that marketing, against an old definition, may now be less a matter of domination and control, and more a matter of “fitting in.”

The article identifies five discreet roles for interactive technology:

1. Thought tracing: which is typically what Google does, and which allows advertising to be served on the basis of user's search terms and patterns of usage.
2. Ubiquitous connectivity: the notion of always on and connected especially with the increasing penetration and speeds of broadband alongside mobile phone usage. Microblogging via sites like Twitter is a good example and there are huge opportunities for marketers to exploit ideas around “attention banking”.
3. Property exchanges: in their ideal form best represented by the late lamented phenomenon of Napster and file sharing. More market acceptability of this has been built by eBay, Flickr and Youtube.
4. Social exchange: Deighton and Kornfield cite South Korea’s Cyworld, where 40% of all South Koreans maintain a presence and where 90% are in their 20s, generating $100 million in revenues each year (Wikipedia 2007). They identity the explosion of Facebook and MySpace as more recent Western examples but question whether this phenomena will “change society and therefore markets as much as the automobile did”.
5. Cultural exchange: they describe marketing as a “cultural producer”, aspiring to be an author in the culture of its customers. Most importantly for marketing to play this role it needs to be “welcomed, not resisted. “

The paper concludes that while meaning-making still remains the central purpose of marketing communication, the shift from broadcasting to interaction within digital communities is moving the locus of control over meanings from marketer to consumer and rewarding more participatory, more sincere, and less directive marketing styles.

What matters for marketers, say Deighton and Kornfield, is that the form of interactivity most attractive is the one which can facilitate personal identity projects and contribute to the collective making of meaning. And within this context, digital based direct marketing as it currently stands – the use of email, spam, banners, interstitials, splash pages, microsites etc etc - makes a marginal contribution to our identity and the creation of meaning.

As it stands the research is qualitative and largely desk research and while it suggests a direction for direct marketing, it doesn’t back its assertions with any quantitative evidence, though there is plenty around (we remember the Australian Financial Review’s digital unit telling us that click through rates on banners on it’s marketing pages were a mere .01%).

Maybe the best way to view this paper is as further evidence that more traditional passive direct marketing is not working in the new fragmented digital world. The challenge is how to stay ahead and engage an increasingly antipathetic target market.