I am in a privileged position. At PowerfulPoints we work with some of the world’s leading brands and, by the nature of our work, we get very “intimate” with them. We get to see their strategies, their plans, their pricing, all sorts of things that many don’t.
Last week we were invited to meet with Chanel in China, referred in by someone who has seen our work. To be sitting in Chanel’s office, on their invitation, talking about how we can help them communicate more effectively was a seriously humbling experience. What I saw they did has changed my idea of what makes some companies great, almost untouchable by competitors.
On the way to the airport to come back to Sydney, I was reflecting on the meeting and that reflection turned to consideration of all the great (and not so great) brands we work with. McDonald’s, Aldi, Qantas, Visa, Coca-Cola, Hyundai, Virgin…I could go on, but you get my drift. I thought about the ones that I considered great and those that were, let’s say, now perhaps not so great.
What do I mean by great? They are brands that maintain market strength despite competitive activity. They are ones who’s brand recognition is distinct and ones that in general, seem to go from strength to strength. If they have a setback, they regather and redefine to take back their leadership quite quickly. They are generally, but not always, strongly profitable (who is always profitable?) They adapt and return to profitability quickly.
Pretty soon, it became clear those brands that are great have some common characteristics. The list isn’t definitive, but this is my view:
- They form partnerships. If everything comes down to price, it works both ways. The great companies are cost conscious, you must be in this day and age, but the great companies form a partnership first and then keep an eye on value. If we were to conduct a personal relationship like some companies conduct their business relationships the divorce rate would be 100%. Great companies look past the basic price and look at the value equation. It’s only when you are in partnership with anybody, when it’s not a day to day proposition in constant fear of losing the other party, that we truly start to invest in the relationship.
When we understand a relationship is going to be a long-term proposition we start giving to the other partner, the dialogue is two way, more honest and open and we invest in getting to know the other party. In other words, we do the right thing to build a long-term connection. We forgive the other for their errors which happen from time to time from both sides) – its not just a series of transactions. We will lose money on a deal because, for whatever reason, they have asked you to but it’s the profit from the account over the longer term that is important, not each job.
- They aren’t driven by cost control. No company has ever found growth through cost-cutting but we see it all the time. This is despite it being pretty much proven that companies that continue to invest in market building exercises during tough times come out the other end stronger. The easiest thing any company can do is focus on cutting costs but the result is, they stop doing the things that they know worked, that led to greatness in the first place. As a result, they no longer do the great things and they just became a mediocre player in the market. In many cases, the past holds them in place for a while but eventually, they start to lose their great people and tend toward being just another company.
It takes true vision and leadership from senior management to hold on in tough times, to not give in to shareholder and market pressure. It takes vision and commitment that’s scarce among senior management. It’s not something that is taught in MBA programs, generally.
- They understand their value proposition. It’s hard to do this: sometimes it’s like standing in a howling great wind, punching you backward and, as Rudyard Kipling so eloquently put it: “And so hold on when there is nothing in you except the will which says to them ‘hold on’”.
In a world full of rapid change as it exists today, it’s probably the biggest challenge. Cut-price competitors, fickle brand loyalty, ‘me too’ brands, emerging technologies…the list is enormous. Great companies don’t ignore these, they adapt to them. They take them as part of the landscape in which they operate. They adapt but they don’t sell out on the value proposition. Instead, they extend and adapt to these changes and the value proposition always holds true.
- They do great things, great. I have been in an extremely fortunate position to see companies close up: lots of them. Big, small, medium, growing, shrinking, too many situations to explain but what seems to stand out with the great companies is, if they are going to do something, they do it with a 100% commitment. They don’t half do it, they do it as it should be done. They attend to the detail they deliver with the professionalism that is consistent with whom they say they are. I have seen what Chanel does and they do it the “Chanel” way. Same with McDonalds, Aldi and smaller companies of which you are yet to hear. They are true to their values and what they believe in. When you think of this, it’s the same on a personal level. We respect and admire individuals who do the same: it is what heroes are made of. It works with companies too. It’s not just words on a mission statement, it is core to who they are, it is deeply embedded in their culture.
- They accept responsibility for what they do. One client, one of the world’s leading brands, blames “competitive pressure” for a continuing lacklustre performance. My experience is great companies rarely blame external factors for a lack of success. If they do, its usually something like “We didn’t react fast enough to a changing market”. Great companies realise that the power to impact change is only available from within and an external focus on challenges faced strips them of power and provides ongoing excuses for failure.
- Great companies hire and retain great people. This is the real lynchpin to success. We had our own example recently when someone left and suddenly work started coming out from clients, he said had minimal opportunities. So much so, we struggle to keep up with the work from some of their accounts. It was a real lesson. Great people want to work with great companies, that’s only natural. I can think of several of the formerly great companies who have restructured and retrenched great people and kept the dead wood. I have listened, open-mouthed sometimes, when I have heard of some of the retrenchments. Those great people have gone on to achieve success in other firms while the company that let them go continued to wallow, planning another restructure.
I had to say no to Chanel on the job we discussed…much to my Country Manager’s deep, deep anguish. It was a difficult decision, but we had no surplus capacity in the studio, it was a very short time frame and we couldn’t deliver to the standard we and Chanel (I’m sure) would have needed. We would have compromised our current client’s work and put the staff under enormous pressure. Subsequent emails have confirmed that Chanel is still very keen to work with us, so it wasn’t a fatal decision.
I have steered away from naming companies that fit into the Great/Not Great areas because it would be inappropriate and is not the purpose of this article. I trust you understand that.
A few times in my career I have had met people and organisations that have significantly impacted my understanding of business and three hours with Chanel was definitely one of them. I hope it has added to your understanding in some way as well.