The Immutable Laws of Being Good to Great - Essay Example

The Immutable Laws of Being Good To Great In today's world of tough competition and cutting-edge technology, the challenge for companies to stand out in the extremely congested marketplace is taxing. More than thorough planning, talented people, and sheer luck, companies need both courage and strong will to eliminate the likelihood of succumbing in mediocrity, or worse, doom. It is such a solace that two great books emerge seeking to assist companies and business leaders not only to survive, but more importantly, to endure in their chosen industry. Jim Collins' Good to Great: Why Some Companies Make The Leapand Other's Don't, and The 22 Immutable Laws of Branding by Al Ries and Laura Ries are books with different topics and are far from being related to each other. Yet, both books provide welcome relief from stereotypical, complicated and confusing corporate literatures on business management and marketing. Good to Great Good to Great - a sort of a prequel to Collins' 1997 bestseller Built to Last - is a recommended business management book for executives and business people. It captures the heart and soul that moves a company from being good to great. According to the book, "Good is the enemy of great. And that is one of the key reasons why we have so little that becomes great Few people attain great lives, in large part because it is just so easy to settle for a good life. The vast majority of companies never become great, precisely because the vast majority become quite good - and that is their main problem."1 Remarkably, Good to Great focuses on character - rather than academic attainment and abilities - as the key element in emerging as a great company as against a good or mediocre one. This book revolutionizes the usual belief that excellent academic background, advanced skills and a ruthless personality are what impel a company toward enduring success. Astoundingly, Collins uses actual good-to-great companies as cases in point and with relevant statistics to support his assertions. The 22 Immutable Laws of Branding The 22 Immutable Laws of Branding of Al Ries and Laura Ries, as the title of the book implies, concentrates on branding. The book provides 22 "laws" to follow in order to build a powerful brand. It guides companies in keeping a brand's power enduring in today's marketplace that is replete with millions of brands all competing for the consumers' attention. This highly recommended book is straightforward and downright simple, making it easy to digest and comprehend. According to Ries & Ries, "Marketing has become too complicated, too confusing, and too full of jargonIf marketing is to fulfill its promise as the driving force in an organization, the marketing process itself has to be simplified. In other words, focused."2 Focused on what Branding. This is what the book strongly suggests. Ries & Ries defines Marketing as synonymous to Branding. "Marketing is Branding. The two concepts are so inextricably linked that it is impossible to separate them."3 The book emphasized the relevance of building the brand in the mind of a prospect. More importantly, it stresses that a brand could either make or break a company. In other words, in order to drive a company to stellar status, it must first develop its brand and make it stick in the mind of prospects. As the book states, "The power of a brand lies in its ability to influence purchasing behavior."4 How This book provides almost all, if not all, answers. The 2 Books As stated in the earlier part of this paper, the 2 books contain different topics. Aside from the fact that both are business books, their focal points are distinct from each other. The Good to Great is a "macro" book, essentially capturing the world of business (i.e., marketing, finance, economics, human resources, etc.). On the other hand, the 22 Immutable Laws of Branding is more of a "micro" book, focusing on one branch of business which is Branding. However, when carefully studied, several concepts in both books relate to one another. Let us see how. A.) Keep it Simple. Keep it Modest. Collins illustrated this concept when he tackled Level 5 Leadership. For him, Level 5 leaders are simple and modest. Level 5 leaders have no air of arrogance. They are unassuming and self-effacing. "The eleven good-to-great CEOs are some of the most remarkable CEOs of the centuryYet despite their remarkable results, almost no one remarked about them!"5 The Level 5 leaders of the 11 good-to-great were modest and humble enough not to claim any credit for the success of the company. They are simple people who just get down with work and do what needs to get done without pomp to feed their egos. Likewise, Ries & Ries illustrates the importance of simplicity in making a brand powerful and enduring, so to speak. After all, branding is all about building the brand in the mind of consumers, and making it stick. Nothing more. As the book states in its Law of Expansion, "If you want to build a powerful brand in the mind of consumers, you need to contract your brand, not expand it."6 Too, in the book's Law of Contraction, a company should bear in mind that it cannot have everything it wants, i.e., dominate the whole market with different categories. To be successful, it must limit its focus by selecting a specific category - the book suggests only one category - and dominate it. Plain and simple. Just choose one category, then conquer it! "Good things happen when you narrow the focus."7 "Think simple. Think like a customer and your brand will become successful."8 B.) Face Reality. Then Act. If a brand is driving the company to its doom, accept it, face reality and move on. Branding exists in the mind of consumers so the company must gear up and work toward achieving this. Once the company fails in this objective - whether by internal or external factors - instead of wallowing in frustration, pointing fingers and wasting money to revive a dying brand - it should move toward the opposite direction: face reality and move on. Ries and Ries explained this in the Law of Change, "Nothing in life, nothing in branding, is ever absolute."9 If a "brand is weak or non-existent in the mind, there is no brand, so you can do anything you want with the brand name. Use it on a totally different product in a totally different category."10 Likewise, according to the Law of Mortality, brands will die. Do not struggle. Face it. "While the laws of branding are immutable, brands themselves are not. They are born, grow up, mature, and eventually will die."11 Collins illustrates this idea by citing that good companies start to develop into great ones once they face reality, no matter how brutal. As they say, reality bites. But once you're bit, don't let it prevent you from pushing forward. Again, face it. Confront it. Then with resolute character, move on and act. Best decisions often come up when you have accepted the truth in your situation. As the book put in, "You absolutely cannot make a series of good decisions without first confronting the brutal facts. The good-to-great companies operated in accordance with this principle, and the comparison companies generally did not."12 In addition, the book illustrates the psychological duality of the Stockdale Paradox: "On the one hand, they stoically accepted the brutal facts of reality. On the other hand, they maintained an unwavering faith in the endgame, and a commitment to prevail as a great company despite the brutal facts."13 C.) The Hedgehog Concept Good to Great demonstrates the Hedgehog Concept in the understanding of 3 circles: what you can be the best in the world at, what drives your economic engine and what you are deeply passionate about.14 Surprisingly, this same concept is prevalent in the book of Ries and Ries. In the Law of Contraction, companies are advised to contract their business, to narrow their focus, to choose a specific category and dominate that category. When you contract and narrow your focus, a company can be one of the best, if not the best, in the market. When a company has decided on what particular category to dominate, that category could propel the company's economic engine. At the same time, the company could channel all its efforts and attention to just one definite category where its heart and passion really resides. When you dominate a category, you become extremely powerful (i.e. Microsoft has 90 percent of the worldwide market for desktop computer operating system. Intel has 80 percent of the worldwide market for microprocessors. Coca-cola has 70 percent of the worldwide market for cola.)15 D.) Perfect Timing There is a time and place for everything and anything. We all know that. The same is true with business. One time you're up, the next time you're down. One time you're a winner, the next you're a loser. Thanks to Collins and Ries and Ries. They demonstrate how to understand this matter of timing crystal clear. Ries and Ries insisted on the Law of Subbrands how subbranding can destroy a brand. "The essence of a brand is some idea or attribute or market segment you can own in the mind. Subbranding is a concept that takes the brand in exactly the opposite direction. Subbranding destroys what branding builds."16 At least when it is not the perfect time and place to subbrand. Here is where perfect timing comes in. According to Ries and Ries in the Law of Siblings, "There is a time and a place to launch a second brand."17 While this book on branding seem to suggest and stress the importance of focusing on a single brand and a single category, it is also open to the idea that there could and would be a time when launching a second brand - and perhaps third, or fourth - is just right. Again, it depends on perfect timing. It cautioned, however, that "a second brand is not for every company."18 In doing this, a company should remember to give a brand its own identity, not similar to its sibling brand. The company should "make each brand as different and distinct as possible."19 Jim Collins likewise proves this idea of timing, perfect timing that is, in his Good to Great book. He duly illustrated this on the case of Kimberly-Clark - one of his 11 good-to-great companies - when its then CEO, Darwin E. Smith, transformed the company from "a stodgy old paper company whose stock had fallen 36 percent behind the general market over the previous twenty years"20 into the leading paper-based consumer products company in the world. This stunning transformation happened not only because Smith is brilliant. More than anything else, it was all a matter of timing. Had Smith made that decision when he knew that it is not the perfect time to dominate the paper-based consumer products, chances are nil that Kimberly-Clark would propel its status. Related Articles 1.) In the October 25, 2005 issue of CNN Money, an article entitled "Microsoft: A window to 2006" by Amanda Cantell, it says that "Fans hope new products will boost the stock next year, but for now it's more of the same."21 While some are anticipating new products from the industry leader in desktop computer operating system, the company knew too well that new products would only hurt, more than it would help. Ries and Ries' Law of Contraction relates to this. Microsoft dominates the worldwide market in its category22, desktop computer operating system that is. This is because Microsoft narrowed its focus. According to Peter Misek, senior technology analyst with Canaccord Capital, "Don't get me wrong - they have some stiff competition in their space and they have to stay on the cutting edge, but I think they have the management to do it."23 Again, it boils down to management. As Collins stresses in his book, "the 'Leadership is the answer to everything' perspective is the modern equivalent of the 'God is the answer to everything' perspective."24 Microsoft has good leadership and it would be able to tread in the water as it is guided by the professional will of its management. "If they don't come up with the idea, they'll buy it. They are a very strong company, it's very well run, and it has tons of cash and no long-term debt. It has a lot going for it."25 2.) Jerry Flint's Backseat Driver section in Forbes.com wrote an article entitled "Steering Clear Of Badge Engineering" posted last October 25, 2005. The article was about Chrysler's new models. In Good to Great, Chrysler is one of the companies under the "unsustained comparisons" category. Unsustained comparison companies were described by Collins as "companies that made a short-term shift from good to great but failed to maintain the trajectory - to address the question of sustainability."26 This happened when Chrysler almost went bankrupt when it decided to enter the aircraft business. As it is, Chrysler is violating Ries and Ries' Law of Contraction. Instead of focusing on one category, which is cars and jeeps, it expands its business on other areas where it has no dominance. Likewise, as an example set by Collins in his concept on technology, Chrysler did not use technology as an accelerator, but as a creator of momentum. From which it failed. "Chrysler, for instance, made superb use of advanced computer-aided and other design technologies but failed to link those technologies to a consistent Hedgehog Concept. As Chrysler strayed outside the three circles in the mid-1980s, from Gulfstream jets to Maserati sports cars, no advanced technology by itself could save the company from another massive downturn. Technology without a clear Hedgehog Conceptcannot make a company great."27 Now, going back to the article, Chrysler is set to launch new models in 2006, "the Dodge Caliber and the Dodge Nitro, which DaimlerChrysler will introduce next year."28 The writer Jerry Flint seems to be pleased with Chrysler's decision. He wrote, "I predict that these two Dodge models, as well as the new Jeeps coming next year, will raise Chrysler's market share. Excluding Mercedes, it is running 13.6%, so I'd estimate it will top 14% next year."29 Notably, the writer "disagree with the company's new plan to try to sell Dodge cars abroad."30 In Ries and Ries' Law of Borders, it cautioned companies which wanted to grow by going global because they believed that that is the "only way to grow."31 The book on branding suggests that building global brands means "keeping the brand's narrow focus in its home country, then go global."32 "If they can't sell the Chrysler name, why would they be able to sell Dodge, which has limited name recognition outside the U.S."33 While the 2 books contain topics distinct from each other, it is possible to connect and relate the topics in Good to Great to those found in The 22 Immutable Laws of Branding. Their objective is crystal clear: help companies from submitting to mediocrity and work toward greatness. You may ask: "Why greatness" Well, as Jim Collins put in, "the real question is not, 'Why greatness' but 'What work makes you feel compelled to try to create greatness' If you have to ask the question, 'Why should we try to make it great Isn't success enough' then you're probably engaged in the wrong line of work."34 Appendix A Jim Collins' Good to Great book maps out the eight (8) processes that could make good companies ascend to greatness. These processes were lifted up from the study he and his research team conducted on eleven (11) companies that follow the basic pattern: "fifteen-year cumulative stock returns at or below the general stock market, punctuated by a transition point, then cumulative returns at least three times the market over the next fifteen years."35 These companies were: Abbott, Circuit City, Fannie Mae, Gillette, Kimberly-Clark, Kroger, Nucor, Philip Morris, Pitney Bowes, Walgreens, and Wells Fargo.36 These 11 good-to-great companies were contrasted against 11 direct comparison companies and six (6) unsustained comparisons.37 The eight (8) routes identified by Collins and his research team were: (1) Level 5 Leadership, (2) First Who Then What, (3) Confront the Brutal Facts (Yet Never Lose Faith) (4) The Hedgehog Concept (Simplicity within the Three Circles), (5) A Culture of Discipline, (6) Technology Accelerators, (7) The Flywheel and the Doom Loop, and (8) Good to Great to Built to Last.38 Collins exemplifies a Level 5 leader as "an individual who blends extreme personal humility with intense professional will."39 Notably, Level 5 leaders were apparent in every good-to-great company as it evolved from good to great status. Level 5 leaders are "incredibly ambitious - but their ambition is first and foremost for the institution, not themselves."40 The book abandoned the belief that people are the company's most important asset and proposes instead that "the right people are."41 Appendix B The 22 Immutable Laws by Al Ries and Laura Ries outlines the 22 laws, immutable as they referred them to be and rightfully so. The book focused on Branding which it defined as any proper noun that exists in the mind of a prospect. It is an idea that a company "owns" in the mind of consumers. Ries and Ries discussed in a very simple manner the 22 immutable laws: (1) Law of Expansion, (2) Law of Contraction, (3) Law of Publicity, (4) Law of Advertising, (5) Law of the Word, (6) Law of Credentials, (7) Law of Quality, (8) Law of the Category, (9) Law of the Name, (10) Law of Extensions, (11) Law of Fellowship, (12) Law of the Generic, (13) Law of the Company, (14) Law of Subbrands, (15) Law of Siblings, (16) Law of Shape, (17) Law of Color, (18) Law of Borders, (19) Law of Consistency, (20) Law of Change, (21) Law of Mortality, and (22) Law of Singularity. Works Cited Cantrell, Amanda. "Microsoft: A window to 2006." CNN Money. CNN.COM. October 25, 2005. Collins, Jim. "Good to Great: Why Some Companies Make The Leap and Others Don't." New York: HarperCollins. 2001. Flint, Jerry. "Steering Clear of Badge Engineering." Backseat Driver. Forbes.com. October 25, 2005. Ries, Al and Laura Ries. "The 22 Immutable Laws of Branding." Great Britain: HarperCollins Publisher. 1999. 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