Bloomberg Businessweek recently (April 15-21, 2013) featured several brief how-to articles on a variety of subjects. One of them, was “How to Reinvent a Brand” as told to Susan Berfield by Lew Frankfort, CEO of Coach, a company that went from a $550 million business to $5 billion in about a decade.
Short but valuable, the article includes what my 25+ years of research into business success and failure patterns finds is one of the most–if not the most–important points about reinventing a brand. And, much to its credit, the article makes this valuable point at a time when not everyone in influential business positions has been recognizing its importance.
But, as a short how-to piece that offers other useful insights about reinventing a brand, the Businessweek article just mentions this important point. The article does not emphasize the point, as I do below. So, Businessweek readers may not realize how crucial this point really is.
Here is the article’s ever-so important point about brand reinvention:
“It is generally a fatal mistake to believe you can leave your customers behind and find new ones.”
Reflecting my research, I’ll expand a bit on this. While you can succeed by gradually adding new markets, selectively pruning the less profitable, or making a well orchestrated shift, you generally should not explicitly throw away your existing customers. Typically, it is destructive to throw away existing customers and hope to easily attract new ones, a relatively common error when companies try something vastly different than what they did before.
The important point made in Businessweek is a crucial rule for success. That’s a major reason why, despite being extremely brief, the Businessweek how-to piece does indeed provide a valuable guideline for reinventing brands. And, that’s why the crucial point is reflected in several of my previous blog posts, newsletter articles, and reports. These range from my most recent prior blog post “Stop the Transformational Change–It’s Too Bold for Penney’s, but Now What?” to my Winning Moves® Special Report “Evolution, Not Revolution: How to Innovate Without Destroying Your Business”.
Granted, there are rare exceptions to this generally so crucial rule. But, unlike the exceptions, most instances of ignoring the rule turn out to be major strategic blunders. Nonetheless, businesses do ignore it, and end up with dismal results. For example, the recent transformation attempt at Penney’s made the fatal error of throwing away existing customers while hoping to attract entirely new and different ones. And, the outcome for Penney’s was quite destructive.
Additionally, recommendations found in prestigious publications like Harvard Business Review, miss the importance of this crucial rule. For example, “Big-Bang Disruption”, an article in the March 2013 issue of Harvard Business Review actually encourages companies to violate the crucial rule by making fast escapes from existing businesses to pursue new ones. These fast escapes often mean leaving existing customers behind. My Recent blog post “Don’t Panic! It Won’t Save You from Market Disrupters” explains why the approach described in “Big-Bang Disruption” can be disastrous. Fortunately, reader feedback published in the following issue (April 2013) of Harvard Business Review points out, much like my blog did, how research finds that fast shifts into new industries are not effective.
Thus, since the crucial rule for reinventing a brand is so often ignored both by companies like Penney’s and by publications, that brief Businessweek how-to article offers a valuable message. So, pay attention to that crucial rule for brand reinvention. Doing so can prevent the fatal error that need not be made.
