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May 20, 2006

A Rose is a Rose: Eight Criteria for a Good Business Name

What’s in a name?

That which we call a rose, by any other word, would smell as sweet.

In his famous line from “Romeo and Juliet,” Shakespeare seems to be saying that a name is nothing more than an artificial and meaningless construct.

Granted, the old Bard could turn a phrase better than anyone. But he obviously never ran a business. For when it comes to positioning products, services and companies in the marketplace, a Lexus or a Starbucks by any other name would not smell as sweet.

Imagine if Intel were called “Microchip Systems Technologies.” Doesn’t exactly roll off the tongue, does it? Plus those little “Intel Inside” stickers you see on the outside of almost every PCs would have to get a lot bigger in order to fit the entire name.

And suppose FedEx had a less handy moniker. Can you picture yourself saying, “Hey, the Worldwide Integrated Shipping Solutions guy is here. Anyone have a package to go?” By the time you got all the words out your mouth the delivery guy would have already come and gone.

The point I’m trying to make here is not so much that corporate names need to be short and to the point, although that certainly helps. The overriding principle is that when it comes to building a strong brand, the right name will give you a lot more leverage in the marketplace, whereas a poorly-chosen name will make it almost impossible to gain any traction.

The “Elite Eight”

Many factors go into the selection of the right corporate name. Here are eight that I’ve found to be of great value when determining and/or assessing a name:

1. Distinctiveness. Does the name stand out from the crowd, especially from other names in the category? Does is separate well from ordinary text and speech? The best names have the presence and impact of a proper noun (i.e., Intel or Lexus). They make you sit up and take notice. Nebulous, generic names like “Systems Integration Technologies” or “Medical Device Group” do not provide clarity or distinctiveness.

2. Brevity. Is the name short enough to be easily recalled and used? If not, how will people truncate the name? For example, a two-word name like “Evergreen Associates” is likely to become “Evergreen.” In the same manner, a combined-word name like “SystemPoint Corporation” is likely to become “Systempoint” or even “Syspoint.” Before settling on a name, think about the various ways customers (and your own staff) might cut it down to size.

3. Integrity. By integrity, I mean the name’s ability to resist reduction to a nickname or acronym. In almost every case, long multi-word names will quickly get reduced to non-communicative initials, such as IBM or GE. If you have a few decades and billions of dollars with which to build your brand, you can survive getting “acronymized.” Otherwise, be very careful of what others might do to your name.

4. Appropriateness. Is there a reasonable fit with the business purpose of the entity? Does the name align with the rest of the brand? Does it reinforce a brand promise or brand attribute? For example, “Acura” evokes a sense of precision and accuracy. “Accelrys” (a supplier of bioinformatics software for gene and protein sequence analysis) suggests acceleration of a process. Also, could the name work equally well (or even better) for another organization or entity? If so, keep looking. Nothing confuses the marketplace like a name that stands for two different products or brands.

5. Easy spelling and pronunciation. Will most people be able to spell the name after hearing it spoken? For example, it’s hard to miss the spelling of Lexus once you hear it. In addition, can people pronounce the name without difficulty after seeing it written? This may sound trivial, but you don’t want people to have to work at verbalizing your name. A name -- especially a synthetic one -- should never turn into a spelling test or make people feel ignorant.

6. Likeability. Will people enjoy using it? Names that are intellectually stimulating have a head start over those that don’t. People like repeating names that provide a good “mouth feel,” have a nice cadence, or sound good to the ear.

7. Extendibility. Does the name have legs? Will it support other brands, sub-brands and endorsed brands? Does it suggest a visual interpretation or lend itself to a number of creative executions? Great names provide endless opportunities for creative twists and turns over time.

8. Protectability. Can the name be trademarked? Is it available for web use? While many names can be trademarked, some are more defensible than others, making them safer and more valuable over the long run. Before settling on a name, it makes sense to consult with an experienced trademark attorney. Since you will be investing far more dollars in building the brand value of the name over the years, consider it money well spent.

In the long run, choosing a corporate name involves as much art as it does science. But the more you stick to these criteria, the better your chances of selecting a name that supports your company and helps to build your brand over time.

Posted by Rod Whitson at 11:20 AM | Permalink | Comments (2) | TrackBacks (0)

May 10, 2006

As the World Becomes More Complex, Simplicity Reigns Supreme

One of my core branding principles states that the more complex the technology or science, the simpler the brand messaging needs to be. When marketing their products or services, companies violate this principle at their own risk.

Evidence of this principle abounds in the consumer electronics world.

In a 2002 poll, the Consumer Electronics Association discovered that 87% of people rated “ease of use” as the most important factor when considering a new technology. Lately, it seems like a lot of companies have rediscovered the strategy of simplicity and are incorporating it into their products and their messaging. But before we examine these newcomers to the simplicity scene, let’s look at a couple of pioneers who have held true to the principle of simplicity over an extended period of time.

No company in the consumer electronics world understands simplicity better than Bose. While the technology driving Bose’s innovations is quite complex, the consumer interface has always been simple. The result is an industry-leading sound quality with interfaces that consumers can understand in seconds -- without reading the user's manual.

In the 1950s, Dr. Amar G. Bose observed that loudspeakers didn’t deliver natural sound. In 1968, after extensive research into the science of sound, Bose introduced the legendary 901 Direct/Reflecting speaker, which reflects 89% of the sound off walls (similar to a live concert) for a natural, lifelike sound. In 1975, Bose developed the 301 series, which went on to become one of the bestselling loudspeakers of all time. Since that time Bose has introduced a new product every few years -- such as the Acoustic Noise Canceling Headsets, the Wave Radio and the 3·2·1 Home Entertainment System -- that captures the interest of consumers.

The result of pursing this strategy of simplicity? Millions of satisfied customers, a spot on the Forbes Weathiest 400, and an estimated net worth of $900 million for Amar Bose.

Henry Klaus offers another example of a design engineer who understood the importance of simplicity. His Tivoli Audio Kloss Model One -- an AM/FM table radio with amazing sound quality -- has remained on the market for more than half a century. You won’t find a better desktop radio for $125, and it fills a room with a high-quality sound that compares with systems costing thousands more. Klaus also innovated the first acoustic suspension speaker that became the basis for the Advent Loudspeaker, which became the reference design for all loudspeakers that followed. When he passed away in 2002, Klaus left a long legacy of technical innovations that bordered on genius but always remained simple and clean at the interface with consumers.

Opposite Ends of the Spectrum

At the other end of the simplicity spectrum is Sony.

Most analysts attribute Sony’s recent woes to lack of innovation -- a real Achilles Heel for product leadership companies that strive to deliver the value proposition of “best product, period.” I agree that lack of innovation tops of the list of Sony’s challenges, and deservedly so. However, I submit that the second through fifth reasons have to do with overly complex products.

As I write this blog, a Sony DA5ES receiver sits next to me on my desk. It has enough power to simulate a California earthquake, but it also has enough complexity to confuse an engineering Ph.D. from Stanford. This receiver sports no less than 37 buttons and knobs on the front panel, most of which I have no idea of what they do. Worse, neither do my teenagers, because after they mess with all 37 knobs it really sounds bad. In today’s world, if a teenager can’t figure out a technology, you know it’s too complex.

Today’s leaders in the simplicity movement include TiVo, Skype’s Voice-of-Internet service, Google’s search engine, Intuit’s Quicken and the Blackberry by RIM. But the real shinning star in the simplicity category is Apple’s iPod. The iPod has been this year’s runaway success story for many reasons. At the top of the list, however, is its simplicity.

Other manufacturers tried for years to achieve dominant market share in the MP3 player market, but their products were too complicated, too confusing or too difficult to use. Apple cracked the nut on a simple design for both the iPod and the companion PC software, iTunes. As a result, Apple has sold more than 20 million iPods to date and holds a 75% share in the MP3 market. More important, Apple has experienced an eight-fold increase in their share price as a reward for their simplicity.

The Simplicity Dark Horse

While Apple may be currently leading the way, I see a real dark horse coming up fast in the race for the simplest consumer electronics -- Royal Philips Electronics.

By the late 1990’s, after decades of relentless Asian competition, the Netherlands-based Royal Philips Electronics had become a slow-moving sluggard whose products -- which ranged from medical diagnostic imaging systems to light bulbs to flat panel TVs -- were quickly losing ground in the marketplace.

According to an article in the November 2005 issue of Fast Company. Phillips attacked the problem of declining market share by deploying researchers in seven countries to survey nearly 2,000 consumers. Their goal? To identify the biggest societal issue that the company should address. The response from those surveyed was loud and urgent -- consumers felt overwhelmed by the complexity of technology.

According to Phillips’ research, some 30% of home-networking products were returned because people couldn't get them to work. In addition, nearly 48% of people had put off buying a digital camera because they thought it would be too complicated. As a result of this feedback, Phillips strategists recognized a huge opportunity -- to be the company that delivered on the promise of sophisticated technology without the hassles. Rather than merely retooling products, Philips would transform itself into a simpler, more market-driven organization. More important, Philips, would position itself as a simple company.

Phillips launched an internal and external campaign, entitled "Sense and Simplicity," which required that everything Philips did going forward had to be technologically advanced but designed with the end user in mind. It also had to be easy to experience. More important, every product and its resulting features had to emanate from a stated and tested consumer need. This ideal now drives everything Phillips does, from product conception to development to packaging and distribution.

This drive for simplicity spans the entire company. For example, Philips recently introduced Dynamic Lighting, which brings the dynamics of daylight into the workplace, creating a stimulating, “natural” lighting ambience and giving people personal control of their lighting. In this way, Dynamic Lighting enhances people’s sense of well-being, motivation and performance.

While many of Phillips’ new products have yet to hit the market, early results of the business reorganization, particularly in North America, have been dramatic. Sales growth for the first half of 2005 was up 35%, and the company was named “Supplier of the Year” by Sam’s Club and Best Buy. Phillips' Ambilight Flat TV and GoGear Digital Camcorder won European iF awards for integrating advanced technologies into a consumer-friendly design, and the Consumer Electronics Association handed the company 12 Innovation Awards.

My bet is that Philips will reemerge over the next several years as a leading technology company, much as Apple has recently done. I don’t pretend to be an investment advisor, but I will be surprised if we don’t see a similar rise in Phillips’ stock price. History shows that markets reward the ability to simplify companies and their products in ways that are meaningful to consumers. As Phillips appears to be learning, a little simplicity can go a long way.

Posted by Rod Whitson at 2:20 PM | Permalink | Comments (0) | TrackBacks (0)

May 2, 2006

What Type of Marketing Organization Are You?

I recently ran across an excellent article in “strategy+business” (an online and hard copy magazine devoted to strategy issues) that shed some interesting light on a very important marketing issue.

The article, entitled “Six Types of Marketing Organizations: Where Do You Fit In”, is based on a study by Booz Allen Hamilton and the ANA (Association of National Advertisers) that identified six basic types of “marketing organizations” within companies. I found it to be a fascinating and insightful look at the importance of making sure the marketing function aligns with what the business really needs.

According to the article, the six types of marketing “organizations” (i.e. the marketing people, systems and processes inside a business and the activities they perform) are as follows:

1. Growth Champion. Marketing drives strategy at the senior level and plays a major role in generating revenue and leading new product and business development.

2. Senior Counselor. Although still functioning at the strategic level, marketing serves as more of an advisor to the CEO than a formulator of company-wide strategy.

3. Brand Foreman. Functioning in a more of tactical role, marketing focuses on providing various services to support the company’s brands. This can include developing communications strategies and creative initiatives, as well as campaign execution.

4. Growth Facilitator. Similar to the growth champion, except here marketing mainly supports other major functions rather than initiating and leading strategy on its own.

5. Best Practices Advisor. Marketing serves as more of a tactical weapon whose primary purpose is to help each business unit achieve maximum effectiveness in their marketing efforts.

6. Service Provider. Marketing acts much like an outside vendor, providing advertising, promotions, public relations and other marketing services to the company’s business units and product teams as needed.

The danger, warns the article, is that most marketing organizations believe they cover all these functions, when in fact they actually perform only one. As a result, there is often a major disconnect between what the business needs from the marketing function and what it actually gets.

The key to resolving this dilemma lies in answering three critical questions:

1. What type of marketing organization currently exists in your company?
2. What type of marketing organization needs to exist in your company (based on your strategic goals, value proposition and the future direction of your business)?
3. How do you properly align the marketing team so that #1 and #2 are the same?

A Simple Test

What I really liked about the article was that it included a link to the Booz Allen/ANA Marketing Profiler, a short questionnaire that identifies your marketing organization’s current profile and offers recommendations for your moving your marketing organization closer to where it needs to be. In addition, the profiler offers resources and readings (based upon your profile) to help formulate the proper strategy for this “migration path.”

I took the profiler for Townsend, Inc., and found it to be quite accurate (we came out as "Growth Champions”) in its assessment of our current marketing function. More important, the recommendations offered to improve our marketing organization were dead on. They helped focus my thinking in several important areas and reinforced a couple of initiatives we have recently begun. For example:

• Recommendation: Develop metrics and decision tools (such as marketing ROI) to measure the performance of individual products, channels and segments.

• Lesson learned: At Townsend, we need to do a better job of measuring our marketing ROI. We have already started down that road by shifting primarily to direct marketing and Internet marketing, which should make it easier for us to track and measure results.

• Recommendation: Don’t keep all decision-making authority at the CMO (Chief Marketing Officer) level. Instead, allocate these “decision rights” to appropriate levels of the organization to ensure accurate, rapid and continuous responses to service requests

• Lesson learned: This was a good reminder that we need to get our internal teams more involved in the marketing process so they can help select where we prospect and ensure that we generate the right kinds of clients for Townsend.

• Recommendation: Make sure your capabilities are properly aligned with both the marketing agenda and the CEO’s priorities. Understand exactly what skills are required in individual areas.

• Lesson learned: If we’re going to market through the Internet, we need to build internal Web-based marketing skills as quickly as possible.

• Recommendation: Involve other organizational areas (operations, product development, finance, sales) early in the process of making marketing investments

• Lesson learned: Again, a good reminder to get our internal teams more involved in how we market as an organization.

The Rise of Samsung

It might be easy to dismiss this kind of assessment as an interesting but not especially valuable exercise. Before doing so, however, consider what assessing their marketing organization did for Samsung.

According to the “strategy+business” article, Eric Kim took over as vice president of global marketing for Samsung in 1999, just as the company embarked on a new strategy to go from “a low-cost producer of electronics, sold primarily under the brand names of its OEM customers, to a manufacturer of high-end digital products.” This represented a huge and very difficult shift for the company, one that could lead to failure on a massive scale if all the proper elements were not in place.

Upon analyzing the skills, structure and core competencies of his marketing organization, Kim quickly realized they did not align with the new direction. He then spent five years reworking Samsung’s entire marketing organization so that it more closely matched the firm’s newly identified needs.

The result?

Last year, Samsung became the world’s 21st most valuable brand (according to the Business Week/Interbrand 2004 rankings), only one spot behind the vaunted Japanese electronics giant, Sony. While many factors contributed to this meteoric rise, developing the right kind of marketing organization clearly played a major role in elevating Samsung to its current position as one of the world’s elite brands.

So -- what kind of marketing organization do you have? And more important, does it deliver what your organization needs?

To find out, take the Booz Allen/ANA Marketing Profiler. I also recommend reading the article to get a full understanding of the concepts involved. You may discover that you’re marketing organization is right on track with where it needs to be. Or you may find out that you’re trying to pound a round peg into a square hole.

Either way, my guess is you’ll find it time well spent.

Posted by Rod Whitson at 7:06 PM | Permalink | Comments (0) | TrackBacks (0)

May 1, 2006

The Best Small Software Company in America?

Most people would have a hard time selecting the best small software company in America. But if we asked Global Shop Solutions customers to vote, they would have no trouble identifying their top pick.

I recently had the great fortune of working with Global Shop in Houston. Their business works well on a lot of levels, but the most remarkable thing about the company is the tremendous value it creates for its customers.

Global Shop provides comprehensive EPR systems to small- and medium-sized manufacturers. It helps those manufacturers automate their entire business from the initial quoting of a project to cash collections and everything in between. The primary benefits to customers are increased productivity and profitability, along with improved customer deliveries. But most customers would say that Global Shop has taken their business from chaos to order and given them tight controls.

Global Shop has emerged as the market leader in its category by focusing with laser-like precision on delivering the basic value proposition of “best total solution.” In fact, it is executing the business strategy of customer intimacy as well as any company I have worked with. As a result, Global Shop now has more than 1,000 installed customers and has grown at a sustained annual rate in excess of 25% for the past several years.

Differentiation Through Training

When prospective customers build a short list of possible vendors in the ERP software space, they quickly see that Global Shop offers the best total solution. This makes a huge difference because the ERP space is littered with failed attempts and implementation failures. Automating every aspect of a manufacturing business is a daunting task, yet Global Shop enables companies to achieve success where most have failed in the past.

How does Global Shop offer a better solution?

For starters, the company’s training resources go far beyond the industry standard, and their customers know it. Not only does Global Shop excel at every point of touch, they also offer a variety of training options that allow customers to quickly build and maintain their software skills in a manner that fits each company’s unique needs.

Each week, the company holds training classes in Houston, where implementation teams immerse themselves in the requirements for successful implementation. Customers can send as many people as they want, as many times as they want -- for free. Everything is included in the upfront cost of the software and the minimal annual licensing fee. The company also offers the best Web-based training in its category.

But what really differentiates Global Shop’s training is that many of their onsite training consultants are former customers who not only have a deep understanding of the software, they also intimately understand the inner workings of small manufacturers. They know the best practices of Global Shop’s diverse customer base, and can often make dozens of high impact, high leverage recommendations that lead to immediate improvements in the customer’s business.

Global Shop also has a unique way of keeping its software up-to-date. Every time the firm does a customization for a customer, that same customization is available to the entire customer base at the next upgrade -- again at no extra cost. As a result, Global Shop customers know that every upgrade will contain the improvements they need to keep their ERP system at the cutting edge for the next 10 to 15 years.

Compelling Brand Personality

From a branding perspective, what impresses me most about Global Shop is its execution and presentation of its brand personality. A brand personality is the human characteristics we associate with a brand. It’s where we make the all-important emotional connection. It’s often the personality we identify with or the personality we aspire to. Global Shop’s execution of its brand personality would make most consumer brands envious, and it is proves critical in closing the sale.

Most of Global Shop’s customers think and act like small, owner-operated businesses, even those that have several hundred employees and an international customer base. Many are family owned businesses. These businesses typically operate under intense competition, with most feeling the pressure from offshore competitors. And despite their small size, these companies are complex operations that require heavy capital investment and expensive engineering talent and skilled labor on the shop floor.

I would characterize Global Shop’s brand personality as “sincere” because it presents itself as a financially strong, family owned business. Global Shop emphasizes the fact that it has been in business for three decades, and makes it very clear that it has no interest in selling out to a larger software company, as so many of its competitors have. Global Shop also makes customers aware that second-generation family members are being groomed to take over the company, and that all of the software code is developed inside the U.S. rather than offshore.

Global Shop has created a compelling brand personality that exerts a magnetic pull on potential and existing customers. Prospects and customers immediately conclude that Global Shop is “like me,” which leads to instant chemistry and a feeling of trust. One definition of trust is “the feeling of you being on my side.” Global Shop conveys this feeling from the moment you first meet them.

All of which adds up to a powerful software company with a powerful brand. I think their customers would certainly agree -- Global Shop is the best small software company in the U.S.

Posted by Rod Whitson at 2:19 PM | Permalink | Comments (0) | TrackBacks (0)