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11.03.2005

“HartBeat” is The Hartman Group's FREE online newsletter, providing insight, analysis, information and strategy to give business leaders the knowledge and vision to build sustainable brands.

For more Hartman Group articles on ORGANIZATIONAL DESIGN, click here...

10.27.2005 "Retail Experience at the Front Lines"

06.04.2004 "Harnessing the Power of Organization"

For more Hartman Group articles on RETAIL EXPERIENCE, click here...

08.25.2005 "Costco vs. Wal-Mart: Getting Beyond Utility"

05.19.2005 "The Myth of One-Stop Shopping"

05.12.2005 "Building Community: the Lost Art of Hanging Out"

04.07.2005 "Trader Joe's: Cracking the Code of Lifestyle Brands"

05.06.2004 "Beware of Self-Checkout and RFIDs"

11.01.2002 "Mom & Pop: What's in a Memory?"

08.02.2002 "The ABCs of Experience"

07.26.2002 "The Retailer as Brand"

06.28.2002 "Experience, Expectation and the Shopping Trip"

04.26.2002 "Sometimes an Experience is Just an Experience"

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Organizational Design: the Future Of Effective Brand Strategies

Of homemade commercials, cardboard furniture & hand-painted ladybugs.

If you listen to the pundits, you'd no doubt be alarmed to hear that your MBA's share price has plummeted as of late. No less than Daniel Pink, writing in the February 2004 Harvard Business Review famously declared "The MFA is the new MBA..." in an ode to the increasing role design plays in contemporary branding efforts:

"...businesses are realizing that the only way to differentiate their goods and services in today's overstocked, materially abundant marketplace is to make their offerings transcendent - physically beautiful and emotionally compelling. Think iMac computers, Design Within Reach, and Target aisles full of Isaac Mizrahi women's wear and Michael Graves toilet brushes."

While we are in general agreement with this position - in fact we have been touting design's importance to effective marketing strategies for some time now - we believe the suggestion of the MBA's demise to be premature and exaggerated, the result of an all-too-common product-centric bias. In fact, we believe the MBA may prove more desirable than ever, especially if the degree provides the necessary organizational skills to navigate the murky branding waters of the 21st century. Yes, that's right, organizational skills.

Frequently when analysts point to the powerful role of design, they forget that design is as much about how people and organizations relate to the specific product, service or experience as it is the products, services or experiences themselves. Sure the iPod looks cool, but part of its success stems from its loyal community of followers, fans and developers, many of which actively tinker with the device to come up with new applications and uses on an ongoing basis. Far from being just a sexy personal music player, the iPod is now an all-purpose platform for creative software and hardware development of all manner, not to mention an international user group. And importantly, almost none of these developments occur with the direction, permission or blessings of Apple, Inc.

In the future, we believe brand success will be as much about creative organizational approaches to design (and branding) as it will the design of the products or experiences themselves; about devising innovative strategies that invite the consumer to shape the contour - and ultimate destiny - of your brand experience; about understanding that in some cases you stand to gain the most by learning how to "let go" or "cede control" as an organization; about understanding how to achieve control without the traditional top-down, "command and control," structures so favored by management types.

So when an interested fan like George Masters decided to make his own iPod commercial and release it on the Internet, Apple took a chance and remained silent. Whereas many traditional brand managers might have turned to their legal departments in a fit of anxiety, Apple let the situation ride. This was a decision that reflected a sophisticated understanding of the organizational dynamics of culture and social interaction. Put more simply, sometimes it's better to wait, watch and listen than to squawk. Let your customer take your brand and run with it, for often the result will be far more creative and "real" than anything your innovation team could ever suggest.

Unfortunately Federal Express wasn't so wise when cash-strapped Jose Avila began crafting make-shift furniture from their shipping boxes. Their knee-jerk response - send legal out with guns blazing - turned what should have been a PR coupe into a predictable (and uninteresting) David vs. Goliath controversy. By now most of America has heard of the tale of the FedEx furniture guy (www.fedexfurniture.com) and trust us, nobody likes a Goliath.

Finally, consider Flickr user mleak's most unusual hobby. Claiming to be "Emily...a sophomore art student at Carnegie Mellon University," mleak spends her spare time capturing small insects, painting corporate logos on them with (very) tiny brushes and magnifying glasses and releasing them into the wild. This is a new art form she calls "parasitic advertising." Among others, she has painted the FedEx logo on a grasshopper and the Pepsi logo on a ladybug. And no, we are not making this up.

What is this about? Who really knows. Is it interesting? Maybe. The take-away here is that mleak's peculiar hobby is but one example of a future wherein brands are increasingly the property not of brand managers or corporations but of the collective conscience, a notion some have described with the phrase "open source marketing." More importantly, the most successful brand manager of the future will rely upon his/her ability to cast the widest net, incorporating as much cultural interplay into the organizational goings-on of their company. As James Cherkoff suggests:

"The new model is outside in: What you will want to do is receive all the information you can from the outside and incorporate them in the processes of the company. They have to actually open up their own (internal) systems and the way they interface with the world."
The participatory consumer: A future in which consumers grow frustrated and simply make their own stuff?

The successful brand managers (and brands) of the next era will be those who are as skilled at crafting and aligning organizations with culture as they are the products and experiences that reside within; those who are able to pilot their organization thru a most tricky course bound by the collective conscience, cultural change, the brand experience and, most importantly, the creative capacity of the consumer.

As author J.D. Lasica suggests:

"We're tired of the 20th-century model of being passive consumers of mass content. We're transitioning to a new kind of culture. More participatory, more open, more interactive where the locus of control passes (from brand manager to consumer)."

This is a world, after all, in which one of the fastest growing segments of the music industry is something called "cut up" or "mash up" music. This consists of consumers simply mixing two (or more) songs or song fragments together to make a "new" song and then releasing the results on the Internet for others to hear. They do this not because they desire to make money, build notoriety or become famous but simply because it's a lot more fun than fighting traffic to drive to Best Buy in search of a copy-protected CD and then trying to figure out how to download the music onto one's iPod.

While the music industry struggles amid declining sales, lukewarm consumer interest, and an outdated 20th century perspective that views music as "songs or products produced by artists that must reside under our control," the participatory consumer is increasingly content to simply fashion their own music product.

In fact, we believe most would agree that if we were to view the contemporary music industry as a brand, they'd be included in textbooks as a worst-practice case study: whine about how your consumer is killing your business, deluge them with a smattering of ill-conceived, confusing copyright protections that punish only your paying customers, and if that doesn't work, serve them with subpoenas and threaten to seize their piggy banks. To paraphrase no less than John Perry Barlow, "...the great dinosaurs likely pitched quite a fit and created a cacophonous roar before going away, but vanish they did."

The bottom line here is that in the future it will be increasingly critical to understand how to quickly re-align your organization to include your consumer, lest your consumer leap mightily (or virtually) over your archaic mote, rendering your brand quaint, irrelevant or, worse yet, obsolete. Apple seems to intuitively grasp this point, the folks at FedEx less so.

And one can't but wonder what fate will befall mainstream grocery retailers. With little to no serious innovation in the past, oh, say, 40 years, perennial heavyweights such as Safeway, Albertsons and Kroger are kicking and splashing just to keep their heads above water. Meanwhile their frustrated consumers are increasingly turning to a most unpredictable (and unprecedented) set of solutions for their food needs. Who could have ever guessed that mainstream US consumers would seriously consider relying on a combination of restaurants, farmer's markets, specialty retailers, big box retailers, co-ops, natural retailers, etc. to meet their food procurement needs? While it remains to be seen whether mainstream grocery can manage to recapture the consumer imagination, we suggest it will be a story worth following.

Dude, you have to maintain: In which we see how organizational design extends beyond products and services

Thus far we have been discussing organizational approaches to design and branding with tangible examples of products (the iPod) and stuff (logos, music, food and furniture). As it happens, organizational design also plays a critical role in the brand experience via its ability to successfully incorporate team members or employees into the brand experience.

The most successful brands, especially in retail, operate within an organizational framework that supports an authentic, indigenous, community experience. This framework is critical because it allows organizations to recruit and retain the personnel who are themselves a critical component of the brand experience. How does this work?

Before any brand experience can resonate with the consumer, it must first appear credible and authentic to the team members. After all, if your team members can't take the brand seriously, there is little chance your customer will.

And in order to get critical buy-in from your team members, they, in turn, must truly believe they are part of something "real," "meaningful" or "larger." This belief can't be ordered or scripted from the top down - via a pep talks or a mission statements - but must arise as an indigenous impulse. Our research identifies two critical components to this impulse.

First, in order for your team members to believe they are part of something "real," the brand must have attained some level of cultural legitimacy in the larger social world. What we mean by this is the brand (or brand experience) must reside within the indigenous collective conscience, within the set of options that are seen as authentic or real, and not necessarily a by-product of the artificial, impersonal, homogenous nature of capitalism. That may sound complicated, but think about it. No matter what Albertsons does, until they address the fact that they are not viewed (by most consumers) as a relevant, interesting feature of contemporary collective life, Albertsons cannot lay claim to any degree of cultural legitimacy.

To most, Albertsons is simply a grocery store, and grocery stores ceased being culturally relevant to consumers in the early 1970s - some 30-odd years ago. By contrast, when you talk to consumers about Trader Joe's, you'll notice their eyes alight with a twinkle. Never mind that Trader Joe's may be every bit as concerned with turning a profit as Albertsons, there is still something unique and personally compelling about the Trader Joe's experience such that it achieves a certain legitimacy in our contemporary culture. Put simply, Trader Joe's is currently "culturally meaningful," interesting and salient in a way that Albertsons is not.

Secondly, in order for team members to find meaning and "authenticity," in the brand, they must first respect the organizational structure of power. Again, this may sound complicated but in reality it is a pretty simple proposition. Devout followers - brand evangelists - will only "legitimate" or "respect," authority structures which appear natural and justified. Traditional top-down authority structures appear arbitrary and capricious, the product of mindless bureaucratic logics strikingly similar to much-maligned parenting techniques ("you'll do this because I said so, after all, I am the boss").

By contrast, many successful brands, especially in retail, have taken the unusual step of letting lower-level team members play an active role in management - both of the everyday workloads as well as the assorted elements of the retail or brand experience (product sets, promotional campaigns, etc.). By opening up the authority structure and encouraging active participation by all, your team members will respond as if they are engaged in something, well, real. Similarly, flexible, horizontal organizations with few layers of authority also foster the perception, if not the reality, that task at hand is less anonymous and ever more meaningful.

As a result, many successful retail brands (e.g., Patagonia, Trader Joe's, Dean & Deluca, Wegman's, Aveda, Origins, Whole Foods, etc.) with an eye toward organizational creativity as well as their "place" in the broader culture, have managed to transform their workforce into enlightened evangelists. What in other contexts would be low-wage service sector positions marked by disinterest and high turnover are now transformed, through creative organizational insight, into interested practitioners of the brand experience - often with developed, specialized skills.

Patagonia is an example of a successful retail brand because of the very people that stock its shelves, man its cash registers and wait on customers. These are the very people that embody the brand. Their employees live the lifestyle Patagonia represents. They are the very "dirtbags" that established the original core customer base the brand was built on.

What's a "dirtbag"? As Patagonia writes on their web site:

"We prefer the human scale to the corporate, vagabonding to tourism, the quirky and lively to the toned down and flattened out. We used to call our own world of alpinists and surfers a dirtbag culture: of temp jobs and long summers; of foraged meals and tribal travel that followed the seasons, from summer climbs in Yosemite to Baja's winter surfbreaks to spring kayaking. And if many of us now work more than we climb, and care more for our families than for bumming about, we still sound our appeal to the dirtbag within, the need for the wild dirtbag spirit to survive in our e'd-out culture."

That is precisely the kind of spirited approach brands so desperately need from their team members if they hope to stage an authentic brand experience.

Bottom line, a retailer like Safeway or Sears - or Target for that matter - can only update or augment their brand experience so far with the addition of stylish, well-designed products. Without the support of team members to maintain the situation, the experience quickly falls flat. For those who remember the oft-maligned (and mocked) retailer Montgomery Wards, we suggest a Montgomery Wards retail store - even with Michael Graves furnishings, iPod displays, and quirky Dutch furniture - will remain a "Monkey Wards," unless it is reconfigured organizationally, from the bottom up, as a "design friendly" culture.

We believe that the successful brand designers of today (and tomorrow) will increasingly recognize that good brand management is as much about understanding how to organizationally manage their brand as it is how to deploy the products and services themselves.

Paper Airplanes

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