How to Save Auto USA

Coming together is a beginning.
Keeping together is progress.
Working together is success.

By Dean Crutchfield

Start it up…

If there’s one thing we can symbolically learn from the spirited GM product chief, Bob Lutz and his 46-year career in the car industry and the intrepid Paypal entrepreneur Elon Musk’s 6 years heading up Tesla, it’s that America defined transportation and it can define it again.

Looking at the American Auto Industry as a brand, there is tremendous potential for its reinvention.

What makes us great fades with age. Everyone has an opinion about how to solve the problems of the Big Three US automakers. Everything from giving Detroit whatever it takes to survive through to merging GM and Chrysler or allowing GM to enter Chapter 11 and Chrysler to die; the prevailing recommendation is that Chapter 11 might give tremendous power to the federally-appointed auto task force that President Obama has created to ameliorate the negative impact on consumer confidence in the industry. All of these ideas are flawed, unstable and excessive.

Henry Ford said that if he had asked customers what they wanted they would have asked for a faster horse. Today we want better cars, faster, that fit the profile: good for planet, good for people and good for profit; green car madness, rules. The difference now is that the Big Three have finally, albeit late in the game, committed themselves to reducing greenhouse gases and increasing fuel economy. Chrysler increased its hybrid technology; Ford has announced its EcoBoost engine program and GM has spent a profligate sum on its Volt.

Even if the Big Three get concessions and rationalize their respective product portfolios, they all have lagging sales, high costs, legacy costs, an over abundance of dealerships, contractual commitments and some would say lethargic company management. The far bigger more potent issue is that with no abatement in sight for this destructive deleveraging recession, the credit strapped, over extended, saving short US driver has retrenched requiring an entirely different role for marketing and its approach.

In tough markets like these, both Bob Lutz and Elon Musk know the four building blocks of successful marketing and brand building: Image and Reputation, Product and Services Offer, Management Style and Manufacturing Culture, and the Capabilities of the Business. The difference lies in their respective approaches.

In 2001, Bob Lutz was brought into GM to “liven up its vehicles” and “is credited with improving the look and feel of its passenger cars.” The newer models were supported by enticing finance and attractive service agreements. Fortunately, one of the building blocks, ‘Management style and Manufacturing Culture,’ had already changed substantially from low trust to high trust production – enabled by the “stop the line” processes implemented in the last two decades of the 20th Century. All of this engendered more trust and sense of ownership by the workforce and productivity and product quality followed suit. The summiteers basked in the headlines and then out of the glare of bright lights and trumpets set about maintaining GM’s bloated product offer and building inefficient gas guzzling SUV’s.

This was when a gallon of prevention would have been worth more than 16 gallons of cure. It’s not just a money injection that’s needed, but an attitude injection to create an ambitious, audacious and imaginative response to the crisis: one that heralds the dawn of a new era and accelerates the need for Silicon Valley spontaneity.

Enter Elon Musk, a Silicon Valley veteran, billionaire and risk taker who has presented his vision of Tesla’s leadership role in the auto industry and its ‘Capabilities’ to propel the auto industry’s progress toward the adoption of electric vehicles by 5 to 10 years (with Government aid). In January, the company signed on to build battery packs for Daimler’s electric Smart cars. As Musk said, “The deal is likely to be the first in a series of strategic partnerships between Tesla and other auto manufacturers to engineer and produce electric cars.” Musk envisions that tomorrow’s cars need to obviate that “image led” trap. This doesn’t mean ugly; the cool image of the Tesla Roadster’s body shape, tires and gearing are aimed at high performance, but the full cycle charge and discharge efficiency of the Tesla Roadster is a whopping 86%!

These new types of clear and defined “good for planet” innovations spur the ‘Capabilities’ of the Big Three and should now drive the management style and manufacturing culture, the cars offered and the image made – not the traditional way of image first, towing (slowly) the three other building blocks forward.

Handing billions to the same auto bosses who got us into this mess might not solve the problems the auto industry faces; it’s not how many cuts you can make, its how many cuts you can take and still keep motoring forward. In that regard wage cuts, job cuts, plant closings, increased productivity and benefit cuts have been relentlessly pushed on hardworking autoworkers.

For spontaneity to work, we need to focus on ‘Capabilities’ and fix some broken windows in Detroit. The current prevailing mindset is fearful, lacks confidence and results in breeding withdrawal and despair; we forget the prosperity of the past and ignore our ability to shape the future.

That is why we need to build urgency, not fear, into the community system. We can start to replenish the ‘Capabilities’ of the Big Three, by establishing properly funded “spontaneous” groups of influential and interested venture capitalists, engineers, designers and autoworkers nationwide to engage in positive discussions on how to advance transportation. These non-partisan groups sole agenda will be the restoration of a positive outlook by sharing technology and generating smart business and product ideas that can be immediately funded and acted upon.

To extricate motor-city from external combustion it needs internal combustion similar to what drove Silicon Valley to lead the world in new technology via generating informal social networks and spontaneously organized workplaces; not stepping on the brakes, strangling R&D and merely focusing on lower emission technologies. This may at first seem like an empty tank of gas and an antithesis to the cooperation and coopetition that prevails within the auto industry, but without wishing to sound Panglossian, there’s much we can learn (and use) from the success of Silicon Valley. The number of firms was abundant, hungry for talent, nimble, cutthroat with a high propensity for individualistic entrepreneurialism. On the surface Silicon Valley looked like the law of the jungle prevailed, but making it really happen was the existence of a wide array of informal social networks thriving underneath the chaos pushing technological breakthroughs, building ambitions and boosting the ‘Capabilities’ of every business.

The importance of informal social networks is very similar to the early days of the car industry where there were literally hundreds of carmakers that survived or died through market forces. So you’ll be pleased to learn today that if you take a quick peek under the hood you’ll find hundreds of future facing car making companies, many with quality products from Aptera to Tesla.

Silicon Valley showcases that informal social networks are key for technological development and the Big Three have what’s needed; in the first place there is a very strong sense of culture and urgency. Management knows that formal and informal social networks have always been highly effective with the latter helping the former. And the unions also have the infrastructure, the talent, networks of communications, newspapers and magazines, trained and paid staffs and press departments to start to make this happen.

To break the frame, the combined forces of the powerful United Auto Workers (UAW) rank and file and the Motor and Equipment Manufacturers Association (MEMA) must put forward their own programs for creating and building informal networks across their membership base and intervene independently in the current crisis. Tapping demand for government funds to rebuild and retool the plants to make energy-efficient cars could rally wide support if it can be shown to be ‘shovel ready’.

The fate of the Motor City captivates our hearts and minds because it speaks to our future. The car industry transcends national boundaries, so by engaging the workforce we can engage the nation and the world to make one thing for certain: General Motors, Ford and Chrysler can be great again. As Henry Ford said:

Coming together is a beginning.
Keeping together is progress.
Working together is success.

Four strategies for beleaguered banks

Four strategies for beleaguered banks

Four strategies for beleaguered banks
Dean Crutchfield Article, CMO Strategy, January 4th 2009, Advertising Age

There’s an old British saying that where there’s muck, there’s brass. Right now the muck is the Financial-services industry, and the brass is the massive opportunity (for CMOs) in the category for ground breaking branding and marketing—one that rivals the defining of the dot-com era.

Once one of America’s most admired and valuable industries, Financial-services has lost its luster and international standing, creating a multibillion-dollar brand vacuum.

There was a saying in the 90’s that 1 out of 2 of your customers would change their spouse in a lifetime, but only 1 in 6 would change their bank. You were assured that your customers would simply hand over their money if you promoted a few attractive services. But trust is earned, and successful brands are a story well told. The category has exhausted both. Many financial brands seem vacuous—nothing more than graphic identities, your reputations hollow shells. Now you must make a case for why consumers should even consider you in the first place. That’s what makes the category so exciting from a marketing standpoint. It’s time to take a hard look at advertising, brand consulting, change management, digital, direct marketing, innovation, media, public relations and retail and their roles to reinvent the industry.

Wall Street has a saying that when you need to reduce risk you need to “get closer to home” and Financial-services companies would benefit by heeding this advice and focusing on four keys to success in this new era:

A clear idea and proposition

True values extend far beyond the bounds of what function Financial-services companies actually perform. Instead they’re anchored in human emotions, concerns, aspirations and ambitions.

If a Financial-services “brand” stands for something powerful, people will buy into you. New rules are needed to permit new forms of endeavour to define what direction the industry needs to move in and what are the challenges your brands need to overcome. To understand how much your current brand must change and what its role is in the business, there is a need to redefine your brand’s meaning by looking under the hood and identifying what you really are and why you’re in business. This is how “who you are” connects to “what your customers need.”

This is not cooking water – it will provide a ‘blueprint’ of your brands future, your organizational style and the direction you need to take for all brand actions and communications. Questions you need to ask yourselves include if your company will engage in more “reciprocity” with customers?  Do you allow customers in, reveal new strategies and admit to mistakes in a clear and concise manner? Will you attempt to undertake initiatives that appear generous, that offer clear messaging and transparency? Are you able to suggest an initiative for customers to try, one which provides a new insight? Can your brand offer customers the opportunity to actively participate?

A brand positioning, with integrity, is communicated internally and externally; it helps create a preference (for the business) to your employees and customers, it builds loyalty and can drive growth, force change and create innovation.

An example of how to break the frame and “sustainably” build a successful $7Billion sub-prime business is Grameen Bank. By focusing on the idea of solidarity lending, Grameen Bank has helped break the cycle of debt for nearly 3.5 million sub-prime members and has a loan recovery rate of over 95%! In April 2008, Grameen Bank opened its first branch in New York and plans for more.

the right kind of leadership

As Jim Collins writes, “All good-to-great companies began the process of finding a path to greatness by confronting the brutal facts of their current reality.” As CMOs you have to recognize that high performance takes humility. These times call for leaders who can hold others’ fears, and foster collaboration and commitment across the entire enterprise.

Accomplished CMOs know their strengths and surround themselves with those who shore up their weaknesses. To evaluate humility they need to define their own rock hard beliefs, plan how they intend to lead, how they will prepare and handle the ongoing crisis and what will be the learning process to achieve quantifiable results.

American Express went against the grain when their CMO, John Hays made the ground breaking decision to help reinvent the business model of philanthropy (i.e. you can make money by doing good) by being the first partner of Product Red, launching the RED card in the UK in ‘06. Humility was required when allegedly the initial launch was nearly scuppered by the realization that thousands of potential new “conscientious consumers” were declined by the unwitting prohibitive rigidity of their UK membership application criteria, but was overcome by the sheer scale of the fanfare and global media attention.

recruiting and retaining talent

The integrity of a Financial-services brand is compromised through fear and those who espouse phrases such as “hiring freeze” and “natural attrition” should be fired. “People” are Financial-services greatest asset; the most important thing a Financial-services company can do is to have a continuous recruitment strategy in place—including success planning—that constantly searches for new talent with new skills.

Rebuilding a Financial-services brand that has integrity and transparency to your employees requires delivering short-term actions that can take the brand deeper into the employee relationship. For example, do you encourage a network effect in your call centers and customer services retail branches and promote peer-to-peer activity that enables employees to actively search for new talent?

The UK’s First Direct (one of a handful of sub-brands HSBC allows) is an excellent, profitable example of the nurturing of talent. Based around the idea that there was a better way to bank, First Direct launched in ’89 as the UK’s first “telephone” bank.

A key to their off-the-chart customer loyalty lies in their approach to hiring talent (actively recommended by staff) that fit the culture with a strong customer service mindset. The company urges its employees to interact with other colleagues to consider better ways to improve customer service. Its call centers always rank the highest in customer satisfaction surveys and has made First Direct the most recommended bank in the UK for the last 13 years in a row.

The culture to deliver value

Culture is the engine that makes a Financial-services company work. How do you separate value from commodity? There are two determinates of value creation in Financial-services: how tightly the ship is run and the closeness of the company’s relationship with the customer. A study by the American Marketing Association reveals it can cost five times more to acquire a new customer than to keep a current one. By retaining just 5% of your customer base can increase your bottom line up to 25%!

The service profit chain model (Heskett, Sasser, & Schlesinger, 1997) examines the relationship between organizational style, employee attitudes, customer satisfaction and sales performance in the retail-banking sector and proves that content employees lead to satisfied customers that generate better sales performance.

Evidently, the most effective Financial-services companies are built from the inside out by taking something that is already there and amplifying it, not by creating something new. The key is that the culture can communicate a unique position in the market place, so if you can’t build a unique advantage over the competition on what you sell, make the advantage how you sell.

In this regard, Goldman Sachs remains unique. For all the industry’s ails, it is still recognized as a gold standard in corporate branding with a true sense of “rigor” that so defines its brand. Its lauded extraction from over reliance on sub-prime months before the meltdown, consistently demonstrates its fleet of foot ability to make big decisions fast. It’s sense of purpose and its highly collaborative one firm culture delivers the powerful advantage to its reputation, marketing and sales efforts.

Now Goldman Sachs is a Bank; they have a massive opportunity to redefine what a global financial brand can be. If they can maintain that strong culture and sense of purpose that so defines them, they can take the lead in a category that needs redefining.

The most impactful way to maximize this massive marketing opportunity is to appeal to today’s consumers with a new approach built around “precision” marketing, “flexibility” of the products/services you offer and deliberate “reciprocity” in the relationship with your customers. The industry can easily capitalize on these more than any other category, but you need to demonstrate, not assert, that it will be delivered.

The Almighty Dollar

Can Obama save the dollar?

The Almighty Dollar

Dean Crutchfield Article, February 16th 2009, Brand/Media/Adweek

Brand America, Champion Obama and the Mighty USD

For many of us, America’s new brand champion is Obama, who is without doubt, our great faith for improving our reputation at home and abroad, as well as dealing with the current crisis that ranges from energy, immigration, national security to tax cuts, Iraq, Iran, Afghanistan through to education, healthcare, Guantanamo and the economy.

Not to be lugubrious, but it’s a tall order and rebuilding confidence won’t be easy. The approach to these monumental challenges is not black and white either: it’s green, because the outcomes will bear down upon the symbol of our great economic doubt: the mighty greenback.

Brand America needs more work abroad than at home. So whilst it’s essential to spread the wealth around in the US and prevent a deepening recession with (temporary) increased government spending, some of the campaign promises must be put on the waiting list while full attention is paid to the critical condition of the economy, Brand America and the USD.

The mighty greenback is an American icon whose value comes in part from the fact it’s one of the most recognized brands in the world. Since WW2, the USD has fueled growth, allowed countries to do business and enabled globalization on an unprecedented scale whilst simultaneously playing an unwitting ambassador for Brand America around the world. People have not just loved the dollar; they have loved what it has enabled them to do. In many regards, it is so much more than many of today’s respected brands.

For a brand to be strong (like its leader), it relies not just on emotional levers, clever messaging and iconography, but it also must have a unique functionality. Apply that to the majority of the world’s currencies (and leaders) and they are by in large prosaic. They lack (worldly) presence, style, intrigue, desire and charisma. In contrast the dollar has a profound global function, elegance and unique beauty combined with myth, legend, adventure and mystique.

What we know has now changed and the quality behind the brand has been stymied. The US dollar accounts for 68% of global currency reserves and the world’s central banks must acquire and hold dollar reserves in corresponding amounts to their currencies in circulation. So for example, if there’s pressure to devalue a particular currency, the more dollars the central bank must hold, thus the dominance of the USD.

Over the last year, around the world, there are demands that US dollar hegemony has got to go. Just take a fleeting glance across an array of media and you’ll groove to a hip hop music video with Jay Z clutching a handful of euros, learn about supermodel, Gisele, last year publicly refusing payment in dollars and hear about Iran’s Ahmadinejad mocking the dollar as a worthless piece of paper.

Just last month, Putin was demanding a wider use of national currencies saying “we all know this well, the whole world based on the dollar is experiencing serious problems” and simultaneously, China accusing the US of plundering global wealth by exploiting the dollars dominance.

No wonder the trust and respect in the dollar has plummeted. It was hanging by a thread when this financial tsunami roared across the globe. Even though the dollar has staged a rally as this crisis has been unfolding – there are platitudes of reasons for the perceived role of the dollar declining, but we must acknowledge that the dollar, as a brand, has afforded the world unique opportunities as the international (reserve) currency and Brand America, the most prosperous country on earth.

It’s a catch-22 situation for Obama (our brand champion) and the USD. As Churchill once said, “it’s only when you risk losing what you can least afford to lose that you learn to play the game.”

It’s not just the country’s future that’s on the line…the US sets the tone for much of the world and Brand America is inextricably tied to the USD brand. Therefore, it is not just an economic problem, but a brand problem: we have a battered reputation, no trust in our leadership, erosion of our market share, pummeled profits, crippled projected revenues, dwindling customer loyalty and a severed stock price.

The solution is not solely an economic one, it’s a need for marketing and brand building that only our new brand champion, Obama, can do. As the 19th Century French politician, Tocqueville Fraud, once said, “when America is good she is great and when she is not good she is not great.”

With Obama at the helm we show to the world our unrivalled ability to renew ourselves and be great – brand revitalization if you like – but can it be the same for the dollar? Clearly trust is an essential ingredient of all brands and their reputations, including currency. And the notion of trust (in the commercial world) has been mainly centered on the transaction itself, but not any more. The notion of trust around the world has dramatically moved on from trust in the product to trust in the people behind the product: the dollar.

So will Obama seek to obviate the dollar’s fall from grace and its global role as the world’s reserve currency or does he acquiesce (too much) to domestic pressure and persist in bailing out everything from too big to fail businesses, banks hoarding their lucre, relief to credit crunched Americans and investors desires for increased corporate profits?

We are at a crossroads with far reaching consequences and denying our basic economic woes will erode credibility and exacerbate the pain. As brand champion elect, Obama needs to ameliorate the fears of the nation and capitalize on the tension between the great faith (we have in him as our brand champion) and our great doubt.

The thundering heard might be grazing, but

the word from national media is all about how the agency world is handling Damocles’ sword and turf wars. Hopefully the many have long term embedded relationships with their clients. But the clients are getting mounting pressure to slim down on current programs. This raises the central issue and the biggest hurdle for professional services: to prove they’re an investment not a cost.

Typically, if the client is half way in and/or obliged to complete the brand overhaul, reputation push or campaign, the funds will remain, often because the switch out costs is too high. However, if you’re heavily project based, you’ll quite likely experience cut backs and cancellations.

For example, latest rumours from KPMG’s advisory business is that they’re urging their clients to cut back severely on their use of consultants as a way to substantially reduce expenditure. Clearly over the coming months each category speciality will also be making similar remarks to protect their client relationship and their professional turf and fees. So its dog eat dog, or is that bull eats bull?

Building Trust

Can it be done when it’s been broken? What are the steps that make it work?

What is Your Share of Trust?

To regain trust we must first learn from the carnage of message management we have been through these last 12 months. From the very beginning we created a cacophony of conflicting messages from discombobulated departments: investor relations, marketing, public affairs, media relations and HR. Then it dawned upon all of us that audiences overlap and the need for unity and consistency is critical. Making matters worse is that we all knew this already.

What is Your Share of Trust?

Dean Crutchfield article, December 2008, Advertising Age

During the latter part of the last century we finally accepted that the age-old notion of “economic man” – a rational, single-minded, self-interested entity – no longer existed. It was abundantly clear that every economic, business and purchasing decision was made by “ethical man” – an emotionally charged, moral entity that was consumed by the affects on people, their community, their well being and their environment. Suddenly, the marketing of “values” and the selling of reputations, products and services had become big business and forever inextricably intertwined.

It was a new era and a quantum leap: a crying out for words like ethics and trust indulged by the rapid adoption across corporate governance, stakeholder groups, CSR, business ethics and the role of vision, mission, values and culture within companies.

Studies audaciously revealed that people had more trust in brands than the Church, Government and Institutions! In the wake of the Enron and WorldCom debacle, this took a thorough beating for sure, but we’re an optimistic lot and past failures are not an indication of future performance. Or so we thought.

Even the 2008 Edelman Trust Barometer survey of 3,100 opinion leaders across 18 countries revealed some fascinating findings:

“At least 70% of respondents in North America (71%) and Asia (72%) state that global business plays a role that no other institution can in addressing major social and environmental challenges. Fifty-seven percent in the European Union and 63% in Latin America also believe this to be true.”

This merger of the economic and ethical has transformed the meaning and context of trust. Hitherto, trust has been an essential ingredient of all brands and their reputations. Consumer expectations are a combination both emotional and rational: that the brand can and will deliver on promise and that it won’t rip them off.

Here’s the catch: stocks do not have a memory recall button, but consumers do. And now we’re deep into another debacle where global markets have been ripped to shreds and working folk are losing their livelihoods and homes, all the while staring down the barrel at sky high gas prices, avoiding salmonella infected jalapeno peppers, tainted baby milk, toys coated in lead paint, lethal pet foods, plastic bottles leaching off poisonous chemicals, the list goes on (too long).

As the shock, horror and probes in the media have shown about the current pandemonium, the notion of trust (in the commercial world) is still naively centered on the transaction itself and minimizing the “risk” involved in the transaction – which is what brands are supposedly all about. But even at this level of transactional trust, the relationship between business and the consumer is a contract of trust that has clearly been broken. With money easy to come by, confidence at arrogant levels, hedge funds heralded as kings and basic risk management theory thrown out of the window we are steeped once again in very murky waters.

The outcome of these times will reveal that our notion of trust has dramatically moved on from just the transaction itself or trust in the company’s product, but to trust in the people behind the product! Right now, it’s less about “can I trust them to deliver?” but “are they the sort of people who would…?”. Are they the sort of people who would sell me a stock that wasn’t worth the paper it was written on; who would sell me a mortgage I can’t repay; who would tell me a product safe when it’s not; who would use questionable chemicals to manufacture goods more cheaply; who would test on animals; pollute the environment, all in the search of a profit?

Today, most organizations commonly refer to the meaning of share in terms of market share, profit share, revenue share and share of wallet, etc. What they often foolishly overlook, however, is that they are also competing with other organizations for share of trust.

So in today’s world, full of litigation, accusation, scandal and bankruptcy, evidence and counter evidence, when it’s down to the wire, whom do you trust? Which of the organizations you are doing business with are and have the sort of people who would tell the honest truth in this matter?

To regain trust we must first learn from the carnage of message management we have been through these last 12 months. From the very beginning we created a cacophony of conflicting messages from discombobulated departments: investor relations, marketing, public affairs, media relations and HR. Then it dawned upon all of us that audiences overlap and the need for unity and consistency is critical. Making matters worse is that we all knew this already.

Secondly, the smug belief that perception is reality has been found wanting. The truth should not be whatever you get others to believe, it should be about the delivery between word and deed: finance might be the brain of the economy, but brands are its heart.

People and business live their lives in the future not the present. If you take away the future the present becomes meaningless. So as we reap the bitter harvest of imprudent lending, there will be revealed a huge new market for trust that the few and the honorable can mount. In this overwhelming need for revitalization of trust, corporations, governments and regulators will all be ferociously fighting to recapture their share.

So even if I’m praying for light at the end of the tunnel, thanking Paulson for the bail out and calling the police to tell them my tax dollars have been stolen, it all comes down to who do you trust? And in this market for “trust” – worth trillions – the battle will be won and lost on the words and deeds of brands.

Dean Crutchfield

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