I met with a potential new client recently for an extended conversation about what we (studio two) might be able to do for them but also as a follow-up to our initial meeting. What’s interesting about this business (lets call them Smith Co.) is that the question of “brand” is pervasive to the entire business.
Let me explain – Smith Co. has been running a regional wholesale supply company in the utility/home trade for a long time – decades – during which growth appears to have been primarily a function of first-mover, good engineering and product, and a driven sales approach typified by an entrepreneurial founder. Marketing, which they freely admit, has never been a strong point, or much of a point at all at Smith Co.
That’s fine – I think that they were doing good marketing all along – getting out into their market, telling their story, selling their product. But now they have a lot of competition, their main product lines have been commoditized into very thin profit-margin land, the original founder and entrepreneur is retired, and the economic downturn of 2009 has hit them a double-whammy. Marketing, branding, and addressing the challenge of growing their business in the years ahead is suddenly on the table.
When I talk with people about “branding” I always try to make sure I get this basic point across: Branding is NOT your logo. Branding is everything that contributes to the perception people have about what you do. So the first question I usually ask an organization is: Where are you going? What do you want? If the organization can’t articulate that basic answer, they have a branding problem. They may also have other fundamental issues that they need to address.
In the case of Smith Co., my initial questions about their business revealed a wide range of issues, remarkably few of which were going to be addressed by branding or marketing. These included issues of growth, leadership, product strategy, competition, history, and many others. At one point in our conversation I pointed out that what they really needed was a consultant with a good background in their field (a Harvard MBA is how I put it….) but curiously, the more we talked the more it became clear that the branding process we were proposing to engage it was fundamentally positioned to address many of these wider, underlying questions they were grappling with. Sometimes the best thing a designer can do is ask questions. A lot of them.
Let’s look at one particular area. Smith Co. historically sold a wide variety of components and manufactured material to the trade. In the process, they became the recognized experts in their particular field, an expertise that they gave away as a value-added component based on the premise that if they helped their customers build effective and functional systems those customers would always return to them. This worked for a long time. Now the competition has emerged into the space and the components have been commoditized. Their customers can now go to any number of different suppliers, shop for the lowest price, comparison shop online, and get fundamentally undifferentiated service from a variety of suppliers. Smith Co. is still giving away the expertise, but that is now manifesting itself as a loss-leader, cutting into their margins on every sale, and requiring them to maintain higher prices for their product than the competition to offset it. They don’t want to let people and expertise go, but they are bleeding cash and losing market share. In part this is happening because they never “claimed” the space of being the experts – they didn’t pursue a long-term brand articulation that they were better than their competition. Now it may be too little, too late to do that.
I suggested that they look at splitting off the design and consulting arm of their business into a separate entity. Smith Co. is afraid to start charging customers for what they previously gave away for free. If a core value for the organization is that they are experts in a complex field, it seems to make sense to capitalize on that and let the wholesale commodity line be unburdened by the additional margin requirement they are currently saddling it with. This new initiative will likely require its own “new” brand – almost as a stand-alone business. Branding this entity, giving the sales people and the expert engineers a way to operate under a new umbrella would, I think, give Smith Co. and the people there some significant relief. Of course, it remains to be seen if there is a profitable market in the services side of their business, but right now they are hobbled by their inability to differentiate the two aspects of what they do, so everything gets commoditized together.
I’m not a Harvard MBA, but I think it’s fascinating to watch how the process of working towards a clear articulation of a business brand reveals layers beneath that when peeled back start to present rich opportunity. Michael Beirut wrote a nice piece about the way that design process, messy, improvisational, and intuitive, nevertheless emerges succesful in Design Observer . Another excellent piece about the way that design contributes to business is in an article in businessweek.com by Diego Rodriguez that is part of a multi-part series on the role of design. My favorite part of this article is his exhortation to stop calling “design” a noun and start looking at it as a verb, i.e., that design is a process applicable to any problem that would benefit from a process-driven examination.
Branding is about what you stand for, where you are going, and how you state those things. Design is a process that reveals these qualities. Both of these verbs imply actions that any business can benefit from.