THIS ARTICLE BY MARK DI SOMMA IS TITLED:
Mega-myths:
The Case Against Volume

6 reasons why scale might just turn out to be a flat-earth theory for some.

For centuries, people believed the world was flat because it seemed self evident. Growth it seems is having the same effect. Faced with continuing pressure to produce, expand and return more and more, so many companies now believe they have no option but to acquire mass. Here are six reasons why so many believe sumo is the way to go – and six arguments that show they might just be wrong!

Myth #1: If it’s big, it has to be great

Male anatomy thinking transferred to business basically. Who says machismo is dead? Maybe not, but not everyone finds it attractive. Big can get too big: too impersonal, too corporate, even too successful for consumers to feel comfortable. And with that comes the very unattractive side effects of complacency, politics, power games, narcissism and ego, and the single-minded determination to concentrate on the stock price at the expense of the buyer.

The best brands retain familiarity despite their size and attract fierce loyalty as a result. Harley Davidson and Apple are owned by shareholders but possessed by their constituency with a loyalty that borders on fanaticism. That’s not purely a symptom of big though. It’s the attraction of personal and relevant, and those are both traits that can quickly become lost.

“Huge” has nothing to do with physical size. Some of the most successful cults are not SMEs or even MEs – but what they’ve kept, critically, is a “small” mindset. They think intimately rather than corporately. They prize consolidated loyalty above expanding footprint. Mambo is a global company, it’s even publicly owned, yet it remains a cult.

Integrity is god. Cult brands don’t sell out. They might sell up – in the sense that they might choose to transit to a mega-brand, but credibility is their most powerful asset, and the “us vs the big bastards” sentiment is one they treasure and guard viciously.

Myth #2: Prestige always add value:

Yes and no. Depends what you mean by value. Come to that, it depends on how you define prestige. Sometimes, being valued and esteemed as an organisation adds other things, such as credibility or recognition, as well as preference. Look at brands like Tag or Dell. They’ve made their mark through astute discounting, but they’ve countered their price point reputation with strong brands that help them avoid simply cheap. They’ve added value to their proposition through brands that are strong and attractive in their own right. Ryanair is not a prestige brand, but it is recognised and it is valued, and because of that, the company has managed to rise above being just another opportunist charter operator.

Myth #3: Carry on doing what you’re good at

Huge brands have enormous license to drive the markets they are prevalent in, and therefore hold strong sway over customer preference. To an extent, customers expect to be led, but they won’t go some places and that’s just that. The secret, as allaboutbranding.com editor Christine Arden points out, is to be consistently surprising. Strong brands do things that on the face of them are surprising, provocative, even controversial – but which, in hindsight, are very “them” and really could and should have only been done by them. The best brands in the world don’t just attract their customers and expect them to stay. They prosper because they have the talent and the commitment to continue to fascinate and allure, to the point where their customers are continually asking “what next?”

Myth #4: To get anywhere, you have to be everywhere

True enough for large brands in the pre-www days, but today you can reach the world from just about anywhere and even more importantly, they can reach and compete with you. Footprint is still critical for some products – nobody buys a tractor sight-unseen, or a cup of coffee for that matter – but more and more goods and services are deliverable from almost anywhere and increasingly sophisticated distribution and line-to-market systems are literally leaving stuff at consumers’ doors. Sure it’s taken a while to make these sales/delivery systems profitable – in fact, I’m still not convinced the model’s right yet – but the changes have been exponential and there’s little to suggest they won’t continue to be so.

Myth #5: There is no other way

There’s always another way, but there may well be no middle way. And by that I mean that big has its rewards, but it’s not devoid of challenges either. Here are just three obstacles that come to mind.

a) Money. As I said, it’s probably never been easier to be a megabrand, but that’s not to suggest for one second that it’s cheap. The investments required in marketing, logistics and distribution alone are massive. Sure, you can make your pitch live to billions by placing an ad on the live Superbowl broadcast. That’ll be a some millions USD and change, thanks, and you can have a starring role as a sponsor at Michael Schumacher’s next press conference. But if you have to ask the price, you can’t afford it.

b) Attention. Being recognised universally does not automatically equate to being accepted or wanted universally. The problem: huge, global brands are now associated with huge global corporations – and huge global corporations are the object of considerable animosity. Nike was cool – until Nike became associated with “slave labour and sweat shops” in Asia … and suddenly, it wasn’t cool anymore. And that’s the risk of being a mega-brand. The higher you rise, the more exposed you are, and the easier it is to be singled out for criticism and media attention. In fact, being a big company can quickly turn you into a big target for some potentially serious aggro looking for publicity. Recent examples - MacDonalds (globalisation), Shell (environment), any major airline (terroism), any major fashion label (anti-fur), Monsanto (GE) ... and the list goes on.

c) Relevance. Increasingly, customers are looking for singularity in the ways they are treated. They want to feel identified. That’s not insurmountable, but it’s much, much harder to do on a large scale.

Myth #6: You have to be seen to be believed

Not anymore. No, now you need to be referenced to be credible. Seth Godin noted recently the new power of blogs for example to spike worldwide interest. As I’ve said elsewhere, statement is out, because it wreaks of self-promotion, but third party mention is cool. Very, very cool. It arouses the one thing that every consumer finds irresistible – the curiosity of a hyperlink to somewhere recommended but as yet unvisited. Blogs fulfil the modern day desire to be across the latest, greatest things that are happening in our world – and the internet enables each person’s discovery of that gem to be their own. Increasingly, success is not about having 1,000,000 customers – it’s about having 1,000,000 x 1 customer. Same number, very different equation.