What’s really bugging VW?

vw-splat-2There’s something I taught my son when he was around 8 and he still remembers well at 12. If I ask him, “how do you keep a secret?” he will reply, “tell no one.” Sounds rather simple. It is.

And yet here we are with the colossal blunder, (or errr… willful criminal fraud) that is the growing VW story. Somehow, the management of VW figured that a secret that tens, if not a hundred, people must have known about, would not see the light of day.

Bill Clinton could not keep a lid on the secret that was his dalliance with Monica Lewinsky and the people tasked with keeping that secret were actually called the Secret Service!

But there is a back-story here that I think is worth looking at. What is your driving force? You and your company?

Up until 2007, General Motors had led global car sales for 77 consecutive years. But slowly, the ramifications of a quote attributed to two different GM CEOs came home to roost. “General Motors is not in the business of making cars, it is in the business of making money.” In the purest mix of capitalism and altruism such a focus would lead to building the best vehicles possible to make the most money possible. But in the real world, that can easily lead to lowest common denominator decisions purely to wring out short term profit. (As GM learned from around 1972 to 2000.)

In the early 2000s the folks at Toyota had realized that GM’s hold on the global sales lead was tenuous and made the decision to do what it would take to assume the #1 position. They became #1, but what it took was a very public slip in quality control followed by deaths, investigations, recalls and a lot of damage to Toyota’s core brand identity which was built on quality. They had been gaining on GM for years by “simply” making the most reliable cars on the planet. But they switched their focus and paid the price.

Now it is VW that has “done what it takes” to wrest the global sales crown from Toyota (which it achieved just this year). I’m sure there was no management retreat where they white-boarded international fraud, but it can be the off-shoot of making your core identity about a sales number. As a result, they have left themselves wide open for crushing fines and lawsuits. (And perhaps jailed executives?) I doubt if VW will go bust, but perhaps someone might like the idea of buying a global car company for half-price…

So my question to all of you is: what is your focus? Is it still being the best purveyor of what you do? Or has it become doing what it takes to meet the numbers?

Ask yourself. Ask your employees. Ask your customers. Listen to the answers and adjust as necessary. One answer forms your decisions from the dark-side of you fighting for every quarter; the other forms decisions based on a radiant march to long-term success. (And happy customers and employees is a nice bonus!)

— Simon Dixon

Who Should I Be: Better or Different?

fast foodAn interesting story in last week’s New York Times discussed the challenges McDonalds is, and has been, facing. Same-store sales have been falling worryingly. As one former McDonalds executive theorized, people think of McDonalds as “fast” and “food” and on both counts they have slipped. The McDonalds burger was recently rated as lowest in taste by a survey conducted by Consumer Reports, while the average time to assemble and serve orders has been increasing.

When asked to explain the meaning of “brand,” I say it is the answer to the question, “What do people think of when they think about me?” This applies whether the “me” in question is a person, product, place or position. And this is an important question for McDonalds right now: who do people think McDonalds is and therefore what do people want them to be? In past, McDonalds had widened its food offerings – the Premium Wrap and salads being examples. But these products have not saved McDonalds from sliding. I think the problem they have is that they decided to try and be something different when their actual problem has been they just have not been the best version of what people wanted them to be. If you serve “fast food” and yet your food is not good and it is also not fast, then you are failing on your basic brand promise. The answer is not selling different food – it is selling food at a higher quality and faster.

Early in my career, I was bemused to watch 7-Eleven start a major campaign to aggressively compete on price with supermarkets. This was costly on two fronts: the price of the advertising and the cost of the markdowns. It was a dumb idea and it netted them nothing except lower profits. 7-Eleven had not focused on what their brand was. No one shops at 7-Eleven for deals; we go to 7-Eleven for convenience. And it has been proven every which way that people will pay for convenience. So all they got out of that decision was brand-erosion and lost profits. Oh, and er, having to sell the company to stave off bankruptcy.

Figure out what your customers see you as. What they like you to be. And then be the best version of that and sell to it.

I was driving to give a marketing talk this past week and NPR was doing a report on falling profits at Kellogg Co. People are turning away from cereals. Various issues are at play here: gluten, culture, sugar, portability and more. And it got me wondering how Kellogg will battle this. Will they cut prices on cereals? (or issue coupons to same effect), Will they try to fight on gluten-free and sugar fronts? (General advice to all: be a “solution” not “less of a problem”). Or will they massage their brand into being more about “breakfast” than about “cereals”? – This might be interesting; with the new FDA re-think on cholesterol, it might be a great time for Kellogg-brand eggs…

— Simon Dixon

Chasing Tales

dog-chasing-tailLast year a friend of mine in DC went to work for the federal government after spending his previous career working in the private sector. A month or so after the switch he came to me saying, “You know people have got these guys all wrong, folks here work really hard.” I did not doubt the veracity of his statement. I know a lot of hard working government folk. (Yes Honey, I mean you too.) Recently we crossed paths again and he was rather despondent. He was dismayed how much time people in his division spent chasing rabbits down holes and how easy things were made difficult by “the system.”

(It’s worth taking a moment to say I hear this kind of story all-too-often in for-profit organizations also.)

I reminded him of his “people here work really hard comment” and said, “Remember, your dog is working really hard when he’s chasing his tail.” (And “Chip,” the Labrador in question, really does work hard! He is focused, resolute and even occasionally catches his tail…)

Something that is an output of our brand creation process is an “Observations and Recommendations” document. It often truly surprises clients what a fresh (and experienced) set of eyeballs (and a confidential set of ears) can learn about their organizations. Sometimes relatively easy things to change are having truly deleterious effect on morale or perceptions of the organization both inside and outside. But you can’t fix the things you don’t know about. You, chasing your peoples “tales” can, with proper analysis, stop them from continually chasing their own “tails”…

Because, if you don’t address these issues, it limits the brand promise you can make, or the kind of effective advertising you can do down the road. Not to mention the cost in employee morale.

One of my favourite quotes is by Basil King who said, “Be bold and mighty forces will come to your aid.” Of course if one is going to act boldly it would be a good idea to be wise in the selected direction of all this boldness… The good news is that all the information you need for that wise decision is out there. In your head. In your staff’s heads. In your customers. If you ask them correctly or more importantly listen to them correctly they’d love to tell you.

It’s the difference between going bold, and getting bowled-over.

— Simon Dixon

Flossed in Translation

HiRes_flossingLast week, I was talking to a good friend who is the Director of Marketing for a startup. His CEO had been talking about their positioning in relation to how easily their publishing product “got stuff out on the net.” However, my perspective was that my 11-year old son is great at getting things “out on the net” – it’s rather simple these days. I suggested that they instead highlight their skills at getting their clients’ slice of the ever-burgeoning internet morass actually noticed and consumed by the people they are seeking to communicate with.

Especially after you remind them, clients are (should be) much more interested in how many people actually interact with their messaging than how wide they happen to disperse it. Buying uninterested and incompatible eyeballs is not a good use of anyone’s media dollars.

Reminiscent of the old adage, “floss only the teeth you want to keep” – chase only the potential customers that make sense to you and you to them.

I have a quip that I often say to clients, paraphrased from something Pastor Britt Merrick said: “People don’t care who you are, they care what they are in you.”  Which is to say, “I don’t care who you or your company or product are, I care why my life will be better if I let you in it.”

And that should be the progression of your marketing conversation. I was chatting with a non-profit recently that could not figure out why they got people all excited and got initial donations but then had a terrible time with retention. The answer, I explained, was that they had not gotten donors passionate and excited about their organization; they had only gotten them passionate and excited about the issue they served. The non-profit had done a tremendous job of branding the problem but they had done a terrible job of branding themselves as the solution. So their donor base was very ripe picking for a non-profit working in the same space that was doing a better job of making their brand outcome-focused as opposed to problem-focused.

If the “brand” of your organization is just a list of things you do, there is no passion and therefore no adhesion. It’s like comparing a dictionary to a novel. I love reading both but there is no such thing as a “can’t put down” dictionary. So if you insist on branding yourself as a list of attributes and a mission statement… well, on behalf of your competitors, thank you very much.

— Simon Dixon

Uber or under?

uber-blogOK, I usually try to avoid writing about what everyone else is writing about so forgive me this time…

There is a lot of talk about Uber these days. I was a fairly early Uber adopter and developed some early opinions, which I think are now coming to roost. I have used Uber mostly in DC, when working at our DC office. DC is, for the most part, awash in cabs. In fact, I have heard previously (and five minutes of research just now seems to confirm) that DC has more cabs per capita than any major US city. Anyway, the reason I started using Uber in DC was because most DC cabs even just a couple of years ago did not take credit cards. Uber allowed me to not carry money – all I needed was my phone. But it seemed to me that this would be a fairly easy fix for the cabs: just start carrying Square or some other card-charging solution. And that has happened. All DC cabs now have some form of automated charging system.

On the other hand, for me the big Uber turn-off is “surge pricing.” And around the third time that I was desperate and Uber sought to take advantage of my desperation by charging me several times the normal fare, I made my vow to make Uber my transportation of last resort. And so it has been. I have not thus far removed my app, but Uber now has in me someone who will only use them when I have zero other options.

“Inreach” vs. “outreach”

I had a conversation this week with a client about the fact that a brand is not just about “outreach” – it is about “inreach.” – What kind of company do you want to be? What kind of a company do your employees think they work for? What kind of culture are you building? When we celebrate the violence of NFL football (which I love to watch) and we incentivize the players with essentially “more violence = more money,” should we be surprised when one of them knocks out his wife? (Perhaps we should be surprised that more of them don’t.) When we celebrate that Uber flouts local laws set up to guarantee certain standards of safety and competence, should we then be surprised that they feel less than beholden to many other laws and conventions also?

Be careful of the “soul” you unleash inside your company.

Between the surge pricing, poor driver management, threatening of reporters, very questionable privacy practices, hyper-aggressive tactics and many other instances of “domination at any price via any scheme,” I believe a wave of anti-Uber is slowly building. And it may turn the corner so that using Uber becomes unfashionable. (Which, if it happens, will be fatal and forever.)

I remember, around 2000, sitting down with reps from the Washington Post advertising division as they stopped by the agency to unleash the draconian price rise for the year. They had little real competition and they threw their weight around mercilessly. And I said to them, “I don’t know what it is going to be, but something is going to provide an alternative to you, and when it happens, droves of people that you have abused will leave on the first ship.” – I was imagining another newspaper but then Craigslist expanded to DC and the rest is history.

Uber’s actions appear to be an outward expression of an internal cultural sickness. If they don’t soon completely and truthfully change their culture, eventually the amount of people looking for another way will be provided one. Perhaps by Lyft making their brand about something kinder, gentler and respectful of privacy or perhaps just by regular cabs upping their game and, because the taxicab laws that Uber is proud to flout, don’t allow cabs “screwing the customers” as a business option.

Uber, and its ilk, like to call themselves “disruptors.” I think, by way of bad attitude and poor treatment of employees and/or customers, many of them are actually “uniters” – they unite forces in opposition to them.

It does not matter if you have the greatest idea in the world; if you ignore and abuse your customers and/or your employees and/or regulators, they will yearn for your demise. And eventually they will get their way. If you doubt the mighty can fall, go read the story of MySpace. Or Enron. Or Blockbuster. Or MCI.

— Simon Dixon

Fix the strategy, Tony.

Fiat_screenshotMaybe the guy from Coke got a job at Fiat… Some of you may recall I blogged a year or so ago about Coke releasing a video about their “assistance” in the fight against obesity. And I thought it was a bonehead move only highlighting their contribution to the problem in the first place. (Plus killing my joy buzz for drinking Coke.)

Now Fiat is elbowing into the game…

Auto historians (or just older folk) may remember that Fiat, (like Alfa Romeo, Renault, Citroen, Peugeot) had to beat a retreat from American shores because of a legion of cars beset with reliability problems. And for years, Fiat was jokingly referred to as an acronym for “Fix It Again Tony.”

In recent years, Fiat has fought its way back to the U.S. And now, in a worrying reminder of times past, Fiat has again scored at the bottom of JD Powers quality surveys. Further worrying is the new spot being released by Fiat. It is a play on the “fix it” legend. I think it is a knuckle-headed decision for 2 reasons:

  1. Why would you want to remind people of “Fix It Again Tony” and start them off on reminding other people?
  2. The spot seems to reinforce the idea that Fiat values style over reliability — which is what pushed them out of the U.S the first time around.

Here’s a nutty idea that GM and Ford finally wrapped their heads around: Just start making good, attractive, reliable cars. People in the U.S. really like that in their transportation. Or at the very least Fiat should refrain from inserting themselves in “fix it” conversations.

Otherwise Fiat will soon stand for “Final Iteration And Termination.” Again…

— Simon Dixon

Oil Slick…

OliveOil_loA study by the University of California Davis found that 69% of store bought olive oils in the U.S. are probably not as labeled, and are actually partially or completely replaced with lower quality olive oil somewhere before they get to the store. They tested 186 samples and some well-known oils including Bertolli, Colavita and Whole Foods failed the test…

Do you know where most olive oil comes from? Well if you said Italy, you’d be giving the same answer as most people. However, Spain is actually the world’s largest producer, producing over 3 times the amount of Italy, but Italy built its export market first and was first to see the brand-value of the premium extra virgin olive oils (EVOO).

Spain has largely been left as a mega-producer with a lack of recognition for their quality EVOO. And that is why I am interested to see what the new Spanish regulations will do for their “brand.” For health reasons, all Spanish olive oil must now be sold in non-reusable bottles. This is being done to ensure that olive oil, particularly in cafes and hotels, cannot be “topped up” from questionable sources. But as a bonus, it also means that people in Spain’s export markets e.g., in the U.S., can now absolutely know that what they are buying is actually genuine. And so Spain now has a tremendous chance to grow its brand. All olive oils that do not have the tamper-proof bottles will be viewed as suspect (particularly if Spain does its job). It is a great opportunity to put Spanish EVOO on the map. It will be interesting to see if Italy responds.  – It wasn’t so long ago that the French laughed at the idea of quality U.S. and Australian wines denting their dominance. How did that play out?

Which competitor are you ignoring? (Including your own inertia…)

(BTW. As far as I could tell, no California brand failed the test. So I will keep buying “Corto” and you can dip your bread at my house with confidence…)

— Simon Dixon