Many times, brand-businesses have insights about the future but do not find the courage to act on these insights. Lack of courage occurs for a number of reasons. Costs, fear of failure, complacency, the comfort of manufacturing what the business knows how to make rather than what solves customers’ problems, a chief of manufacturing who says, “Not on my line” or a siloed organization: all tend to collapse courage and get in the way of making things happen.

These brand-businesses do not have the will to do. So, something amazing passes through their systems causing lost chances, missed opportunities and the chance to get ahead of curve. Having the courage to commit to a vision or an insight is essential for brand-businesses, especially today in a fast-changing, volatile world. The courage to commit starts with brand leadership. Brand leadership is the key to action.

Brands thrive if leadership sees ahead and creates a plan for winning. Brands need to keep innovating in order to stay relevant. Brands need to keep in touch with their customers. Brands need leaders who love the core products and who want to make these better. But, brands also need leaders who can see ahead, adopt new ideas and act.

One of the criteria for great brand leadership is knowing the difference between being certain and being confident. Looking for certainty is a dead-end street. Brand leaders who seek certainty usually will not have the courage to act. Death and taxes are certain: all else are not. On the other hand, confidence is critical. A brand leader who is confident that an idea is worth investing in has the courage to bring the idea to fruition. Being able to say, ‘No, I am not certain this will work, but I am confident this is the right thing to do,” is a mark of a great brand leader.

Great brand leaders are authoritative, credible, responsible, trustworthy and they have integrity. When great brand leadership is lacking, brands suffer. Those seeking certainty will jettison ideas because there is no way of supporting a world of no doubt. There is no way of having absolute conviction that something is true if it has never yet happened. Great ideas die when the brand leader, presented with a new idea, asks, “Can you give me an example of who has done this before successfully?”

In the early 2000’s, an appliance company created a smart fridge. It was years ahead of the marketplace. This fridge would have the ability to communicate when foodstuffs were going bad; it would be able to order food stuffs that were running low; and it had a computer that allowed you to keep a meal calendar and create meal planning. The smart fridge would be hooked up to your home Internet system and become a communications hub for the family. The appliance company made one of these. This one-of-a-kind smart fridge was trucked around to various cities and company offices. But, the smart fridge never saw the light of day with consumers. Leadership was unsure and non-committal. Leadership wanted to continue to know more. Leadership was concerned more about failure of this product than the product’s success. No one could promise leadership the certainty of a win.

Today, smart fridges abound. Take the Samsung Hub concept. According to its website, Samsung Hub… “… with Alexa built-in, helps you stay connected to your family and home, whenever and wherever. Family Hub™ lets you control your Samsung smart appliances and devices, stream music, share pictures with your family, and so much more, all right from your fridge.” Samsung has always had leadership that respected innovation and accepted risk. As early as 2005, Samsung previewed a digital convergence fridge. It had a home organizer on the front door.  This organizer had categories such as Food remember, Digital schedule and calendar, digital memo pad and digital radio. 

Samsung’s early innovations in clothes washers and dryers, again from 2005, changed the way other manufacturers thought about these appliances. Samsung featured the Silver Nano Health System clothes washer. This feature used silver ions that melt in the water to get rid of germs and provide sterilization.  The video on the Silver Nano indicated that the silver ions decomposed detritus to 1/1000^th of a hair width, provided 99.99% sterilization and odor removal and removed irritants thus preventing atrophic dermatitis.

Ten years ago, in 2012, a hotel company had a plan for a net-zero, sustainable hotel. At the time, research indicated that a sustainable, responsible hotel would solve a problem for many travelers who expected products and services to reflect their personal values. The sustainable hotel’s concept was designed around the idea of innovating for responsible living. This hotel was to be a disrupter: a building that would be green from top to bottom. Partners with expertise in specific areas of sustainability and technology were signed; the specific location was identified and the land owner was eager for discussions to start. The innovation hotel would also be a pipeline for the company’s other branded hotels as new ideas could be tested, measured and managed in real-time with winning ideas transferred within the company’s system. Data showed that this sustainable hotel would be a profitable entity for the company, especially when it came to the key hotel-industry metric of RevPar, revenue per available room.

A team worked on the strategy and planned for months. Money was spent, presentations were delivered. And then, nothing… shelved with all the other what ifs. It was the hotel that never happened. At least not at this company. Leadership was worried about short-term investment rather than the long-term profitability of the innovation. Leadership wanted certainty that this sustainable hotel would succeed.

Now, as reported in The New York Times, there are many hotels with the same sustainability concept that are actually being built or have been built, receiving guests. Leadership at these hotels are willing to commit to the greater good. As in 2012, once again new research states travelers commitment to eco-consciousness when it comes to the actual hotel. In a Booking.com survey, 71% of respondents say they plan to travel greener. And, more than 50% of the respondents indicate that they “are determined” to make greener travel choices. The New York Times states that these hospitality options are way beyond the ditching of tiny plastic shampoo bottles and asking guests to reuse their towels. These hotels are focusing on the entire building. These hotels are focused on environmental efficiency and effectiveness, from solar panels to zero waste.

When Boards of Directors, investors and analysts see the present and the future, and if they believe in ing strong, resilient, authoritative, trustworthy brand-businesses that will continue to generate enduring profitable growth, great leaders must be in place to make these insights realities. 

Great brand leadership takes courage. Great brand leadership requires a will to do based on confidence. Great brand leaders know what they do not know and exercise informed judgment. Great brand leaders weigh informed action against inaction: they balance the need to know with certainty against the necessity for a confident decision. Great brand leaders take risks; they take leaps of faith based on informed judgment: they have confidence that these are leaps in the right direction.

Employees are the frontline when it comes to customer relationships and delivering the brand experience.  This is especially true in a service business. Investing in a brand’s people should always be a priority.

In March 2022, Starbucks changed its CEO. Kevin Johnson who became CEO in 2017, announced that he was leaving. Mr. Johnson was replaced by Starbucks founder, Howard Schultz. Faced with external pressures and internal unrest, Mr. Schultz is defying the financial norm of purchasing buybacks and focusing those monies on Starbucks’ employees. Mr. Schultz will be investing in the gold mine that is his frontline.

Regardless of one’s position on Starbucks’ unionization, investing in a brand’s employees is the right thing to do. Just because a business is customer-focused does not mean that customers come first. Customers come second. Employees, the brand’s people, come first.

Internal alignment is essential. A committed culture is critical. A disgruntled culture is a crisis. Internal brand pride is a key success factor affecting external attitudes and outcomes. If a brand’s people are not proud and inspired then a brand will falter.

If a brand wants its employees to love the brand then the brand needs to love its employees. If a brand wants its employees to have passion and pride in the delivery of a trustworthy relevant, differentiating quality experience than the brand must demonstrate passion and pride in what employees do and in who they are.

Data show that employees play a powerful role in shaping business perceptions through positive communications with all stakeholders. Proud employees communicate well beyond their place of work. Proud employees’ advocacy of the business enhances perceptions among external and internal stakeholder audiences. Employee pride translates into higher job satisfaction. Employee pride and satisfaction contribute to customer satisfaction. 

The difficulties brand-businesses face due to the impact of coronavirus have just exasperated the difficulties of keeping a workforce happy, engaged and committed to the brand. Keeping a brand’s culture alive when working from home is incredibly challenging. Even more challenging is keeping a workforce that must show up at work committed during a pandemic. 

It is unfortunate that a keen, laser-like focus on employees is something that tends to be put aside when management and investors focus on financial engineering such as extreme cost cutting including job losses, debt accumulation, share buy-backs, increased dividends, forced spinoffs and money siphoned into the pockets of investors rather than invested into businesses. Investments in continuous improvement and innovation are decreased as dividends and share buybacks are increased. Monies are siphoned from employee training and recognition programs, R&D, customer insight research, service and support and marketing resources. 

As for buybacks, data in The New York Times indicates that in 2021, companies in the S&P 500 repurchased $882 billion in shares. The New York Times also reported that analysts at Goldman Sachs expect this year’s forecast to be over $1 trillion in buybacks.

Barron’s, the financial magazine, wrote that there may be a slowing in buybacks. Quoting a variety of sources, Barron’s indicated that where dividends are “sacrosanct,” buybacks are more flexible. Additionally, with a rising interest rate, using debt to buy back shares is looking like a less desirable action. However, Barron’s also notes that there are few examples of companies “de-emphasizing or suspending share repurchases.” There is nothing quite like juicing your stock price.

This is what makes Starbucks’ move so interesting.

The first action Mr. Schultz took in what is now his third term as CEO was to suspend buybacks and invest the money in Starbucks’ people. Mr. Schultz said that stopping the share buybacks would allow Starbucks “… to invest more profit into our people and our stores – the only way to create long-term value for all stakeholders.” The Wall Street Journal reported that during a “forum” at Starbucks’ headquarters, Mr. Schultz told employees that Starbucks had not done enough for them in recent years. He said, “We have to reimagine the role and responsibility of a public company in America today. We have not done enough. I promise to do better.”

Recognizing that there is quantity of growth and quality of growth, Mr. Schultz said, “… Starbucks has a winning strategy and millions of loyal customers and that it was not worth fixating on the company’s stock price. He said he faced pushback when investing returns in benefits for part-time employees when he first started the company, but it was the right thing to do for Starbucks and its workers. He added, “For all of you following the stock price today and that stock is going down, that’s a short-term thing.”

With more Starbucks voting to unionize, Mr. Schultz and his leadership team are out in the field listening to employees express their complaints and concerns. Mr. Schultz wants to better understand how employees feel. Mr. Schultz said employee feedback will “inform” the brand’s “decision-making” according to The Wall Street Journal. In addition, Mr. Schultz has hired a Chief Strategy Officer, Frank Britt, reinstating this function that was eliminated in 2018. According to Mr. Schultz, Frank Britt, formerly of Penn Foster, a workplace development enterprise, has spent his career “… empowering frontline employees to unlock their full potential in work and life.”

As The Wall Street Journal reported, Mr. Schultz is “… reviewing the company’s benefits to develop an expanded employee-benefit package in an effort to better recruit and retain baristas.” It appears as if these benefits will only be for non-union personnel. Legal restraints prohibit alterations to union-agreed terms for unionized workers without bargaining with their union. Mr. Schultz has been clear as to his feelings about unionization. On the other hand, investing in people and stores should not be seen as simply a way to bust burgeoning unions. Investing in people and stores should be seen as a way to build a better brand.

If you think that focusing on building employee pride and passion is less effective than product or service or pricing, you would be wrong. The 2003-2005 turnaround at McDonald’s was not achieved solely by the creation of its continuing “i’m lovin’ it” campaign. There was a concerted effort to build back employee enthusiasm and advocacy for the McDonald’s brand. In 2002, morale among employees, corporate and in stores, was funereal. Unhappy employees at the counters took out their feelings on customers. Reports of rudeness and inaccurate orders rose, bathrooms were not cleaned as frequently, tables were dirty, lines at drive-thru were long and drive-thru times increased.

Then CEO, Jim Cantalupo, publicly defended the reputation of every individual who worked at McDonald’s. He invested in employees and in the quality of the HR department. McDonald’s created an onboarding program, “Learnin’ It, Livin’ It, Lovin’ It” and focused on a lifetime of skills that a job at McDonald’s offered. Not every employee looks for a lifetime job, but they do want a job that delivers a lifetime of skill sets transferable to other jobs. Employees want to acquire skills that can last them a lifetime.

Horscht Schulze, founding president and former COO of The Ritz Carlton Hotel Company, built The Ritz Carlton brand on employee passion. The core guiding employee concept was “Ladies and gentlemen serving ladies and gentlemen. In a 2006 article from Dealerscope, Audrey Gray wrote, “The Ritz Carlton is so intent on empowering their employees to ‘wow’ customers, each employee has permission to spend up to $2000 a day per guest to fulfill expresses or unexpressed wishes.” “… the company’s most successful customer service policies revolve around hiring and empowering their employees. The Ritz Carlton acted on the belief that if its people did not believe in the brand then the brand could not expect its guests to believe in the brand. 

Publix supermarkets has about 1000 stores, about 800 of which are in Florida. Publix’ culture is one element that makes Publix so successful and such a nice place to shop. And, its culture is based in part on employee ownership. Publix is also a non-unionized organization. According to Barron’s, of its 225,000 employees, 205,000 own Publix stock. Publix is the largest employee-owned company in the United States. Publix is a private company that is owned by employees, Board members and the Jenkins family which founded the business. Publix shares are not traded publicly. Stock is awarded yearly to staff members. Staff members can also purchase stock from the company. Barron’s calls Publix’ culture “strong and durable.”  Publix treats its employees as owners, which they are: the workers are the winners, not the investors, as Barron’s points out. And, Publix has stated that it plows its money into its operations and stores rather than investing in buybacks.

A brand’s service experience is a key factor in making a brand more attractive. How customers are treated makes all the difference in the world. To be successful, brands must take their service to the next level. This includes building and reinforcing employee pride and brand commitment. Pride transfers to the other side of the counter.

Howard Schultz is making a bold move. What is especially important to note, politics aside, is that he is making this move in a business world that has been increasingly focused on the short-term. Mr. Schultz understands that Starbucks grew based not just on product but by offering a comfortable third place staffed with knowledgeable, friendly baristas. These baristas were not just serving the brand’s products; they were serving the brand’s experience. They were aficionados of coffee. The baristas were not just agreeing to Starbucks’ brand experience, they were advocates and adherents of Starbucks’ brand experience. Starbucks’ baristas put the brand experience in the hands of every single customer. The Starbucks brand cannot afford to have unhappy baristas.

Putting monies into its employees is the right thing to do. Not just for the employees, but for all stakeholders. With a committed workforce, Starbucks, and any brand for that matter, has a competitive advantage. Focusing on the long-term health and welfare of employees at the expense of short-term stock gains is not an expense at all. It is an investment for high quality revenue growth.

Activist investors are circling Kohl’s, the largest department store chain in the US. 

The activists’ complaints focus on Kohl’s share price not doing as well as they wish. In other words, Kohl’s activist investors are not making as much money as they would like to make. These investors are pushing for an entirely new Board that will in turn push for a sale. With a sale, these activist investors would make a lot of money immediately. After that, they would not have much interest in Kohl’s future. As Barron’s, the financial news magazine stated, it is unclear if a private buyer would be able to develop a strategy that would be any better than the brand’s current strategy. However, “… that wouldn’t be the shareholders’ problem anymore.”

Once again, a brand is being excoriated by value extractors who are only interested in their short-term monetary gain. The protests of these investors center around poor performance. This is just a euphemism for “the stock could be higher and we could be making more money.” The main activist fund pushing for a sale stated that a sale would be “value maximizing.”  A 2014 Harvard Business Review article, titled Profit Without Prosperity pointed out that an obsessive focus on shareholder value alone makes executives and shareholders happy, but it is a system that shortchanges overall, sustainable business prosperity.

Kohl’s is a department store and the department store category is facing challenges. Kohl’s is in a muddled middle space that feels pressure from discount stores at one end like T. J. Maxx and big box stores on the other end like Target and Walmart. (The original Kohl’s department store positioned itself as an affordable, but not discount, emporium with a wide variety of goods.) Many department stores such as JC Penney, Neiman Marcus, Sears along with its Kmart brand and others filed for bankruptcy.

In Kohl’s’ March 2022 investor call, there were many items to satisfy the activists. Kohl’s has increased its dividends. Kohl’s had a good holiday season. Kohl’s’ partnership with Amazon for pick-ups and returns is doing well. Kohl’s partnership with Sephora for stores-within-stores is attractive. Kohl’s made drastic alterations to its clothing lines dropping well-known brands with limited appeal while adding more popular brands. Kohl’s enhanced its loyalty program. 

Kohl’s executives were upbeat about the year’s outlook. Kohl’s reiterated its strategy for long-term growth: to be the store that sells all of the brands needed for leading a more active and casual lifestyle. And, although Kohl’s missed analysts estimates, the report showed topline “promise”. The strategy showed “momentum.” And, according to Barron’s, there were “impressive gains in high growth areas such as athleisure and activewear. (Kohl’s) does expect revenue to come in higher than expected for the year as a whole.” 

These impressive gains will not convince the short-termers, even though Kohl’s bet on athleisure is looking smart. Lululemon, the high end athleisure wear brand, posted strong earnings in fourth quarter 2021. Lululemon’s CEO stated that athletic apparel continues to grow “at a faster rate than” the apparel category in general.

As Barron’s made clear, those interested in a sale of Kohl’s “… have little interest in Kohl’s’ long-term strategic goals. If anything, those (long-term goals) are ongoing impediments….” None of the statements from Kohl’s during the investor call changed activists’ minds. 

When it comes to brands, this kind of “quarterly capitalism” from activists is a killer. Activist investors tend to focus on making that short-term dollar rather than supporting a brand strategy focused on short-term and long-term. The fact is that a for a brand to live it needs a strategy that includes both the short-term and long-term. If there is no short-term than there is no long-term. However, without the long-term, there will not be enduring profitable growth. 

In 2015, in a famous letter, Larry Fink, CEO of Black Rock, Inc., urged public companies to focus on long-term approaches to generating value or lose Black Rock’s support. He said that companies should actively avoid surrendering to the short-term pressures created by the increase in activist shareholders.

Also, in 2015, James Surowieki wrote for The New Yorker’s financial page, “it’s become a commonplace that American companies are too obsessed with the short term. In the heyday of Bell Labs and Xerox PARC, the argument goes, corporations had long time horizons and invested heavily in the future. But now investors care only about quarterly earnings and short-term stock prices….” 

In one of his New York Times Deal Book columns, Adam Ross Sorkin weighed in on short-termism pointing out that there is no excuse for “activist shareholders’ seemingly short-term financial engineering efforts like buy-backs, dividends, spinoffs and sales, which can quickly send shares spiking while potentially leaving the company more vulnerable later, especially when a company uses borrowed money to buy its own shares.” 

And just this past week, activist Bill Ackman announced that he and his hedge fund Pershing Square were ditching short-term activism. The new approach will be more “constructive” and “thoughtful” investing in brand-businesses that will outperform over the longer term. In the annual letter to shareholders, Mr. Ackman wrote: “We expect that these companies will grow revenues and profitability over the long-term, regardless of recent events and the various other challenges that the world will face over the short, intermediate, and long-term.”

Kohl’s as well is taking on the activists. In a shareholder letter, last week, Kohl’s stated that lead activist Macellum, led by Jonathan Duskin, “… is pushing for a hasty sale at any price” adding that this “reveals a short-term approach that is not in the best interest of the company’s shareholders.” The letter continued, “The choice is clear: re-elect the Kohl’s’ Board… or elect Jonathan Duskin and his associates to destroy value.”

For those who believe in brands, this activist behavior is troubling. At its most basic level, activists of this type shun the fact that there can be no shareholder value without customer-perceived value. In fact, in all the press reports describing the activist machinations, the words customer-perceived value never are spoken. 

Peter Drucker, the respected management guru believed that the purpose of business is to create a customer. Losing customer focus is a certain path to trouble. The future will belong to customer-focused businesses that are best at attracting and retaining customers resulting in sustainable, profitable share growth.

The greed squads of activist investors circling Kohl’s appear to have little interest in Kohl’s as a brand. They see a way to make a lot of money quickly. Kohl’s will wind up with a lot of debt. Then, the activists will lose interest in the brand. 

Enriching Kohl’s shareholders through a sale has the potential to destroy the Kohl’s brand, as Kohl’s stated in its letter. Growing shareholder returns through this type of financial finagling while failing to grow customer–perceived brand value leads to a weakened brand-business. 

Even Wisconsin senator Tammy Baldwin is upset with this activist initiative. Kohl’s was founded and is based in Wisconsin. In her public statement she said that a sale of Kohl’s would “… increase the risk of bankruptcy or imperil the jobs and retirement security of thousands of Wisconsin workers.” If you think this is hyperbole, think again: the activists who pushed around Toys R’ Us, putting it in bankruptcy, faced charges of ruining hundreds of workers’ retirement savings.

Activist investors like those pursuing Kohl’s do not unlock value; they exploit value for short-term benefit. Brands pay the price for these pecuniary, greedy actions. These activists focus on the bottom line. But, there cannot be sustainable growth of the bottom line unless there is quality growth of the top line. One thing is clear: you cannot cost manage your way to enduring profitable growth. For the Kohl’s brand to survive and grow, Kohl’s’ leaders must focus on satisfying customer needs rather than catering solely to shareholder riches.

In our fast-changing, volatile world, brands need customer-insight driven innovation. Innovation breathes life into brands. Innovation keeps brands relevant in the eyes of customers. But, not all innovations need be inventions. Some innovations can be reimagining existing processes and technologies for new uses. Innovation is the use of a better, and as a result, new idea or method. Invention is the generation of the idea or method itself. Innovation differs from improvement as innovation means doing something differently; it does not mean doing the same thing better.

Innovation is the challenge that Kirin is taking head-on. Kirin is the Japanese brewery brand with the namesake beer, Kirin Lager and another most popular Japanese brand, Ichiban Shibori. Like many Japanese firms such a Yamaha, Kirin is a huge, multi-national organization. Kirin has holdings not just in brewing but across other categories such as restaurants, agribusiness, food, healthcare, pharmaceuticals and nutrient foods. Kirin is part of the even larger conglomerate, Mitsubishi. 

When it comes to its beer brewing business, Kirin is experiencing the pain of Japan’s demographic decline. The Japanese beer market is in a steep downward dive. The Japanese beer market has declined by one third since 1994. Also, coronavirus has had a negative impact on beer drinking since people did not go out to bars, restaurants, events or clubs. 

Rather than continuing to focus on a declining business, Kirin is going to use its brewery knowledge to “… turn Kirin into a fermentation biotechnology company” according to a report in Financial Times. Fermentation has health benefits and is already part of health foods such as yogurt, kimchi and kombucha. Kirin will innovate to focus on customer wellness needs. Fermentation is one of the oldest, and one of the latest, ways in which foods can become even more nutritional.

Kirin’s CEO told Financial Times, “If the beer segment would grow forever, it would’ve been better for us to focus on it, because making a challenge in a new business is very tough.” 

Tackling this challenge head-on though is an absolute necessity for keeping the Kirin brand alive and well and relevant.

One of the most troubling tendencies of brand management is believing that what worked yesterday will work today. Doing what once worked when the current landscape is different makes no sense. Thinking that yesterday’s successes will continue to propel a brand to tomorrow’s successes is inward looking. The brand misses what is happening now and what can happen down the road. And, rather than be complacent, Kirin is taking action to change its status quo.

Customers change quickly. Behaviors can change overnight if faced with new realities. Just look at the demand for delivery of restaurant meals and grocery items. And, interestingly, behaviors can revert back quickly as well. Brands such as Zoom and Peloton have found out that their pandemic highs have reversed due to reordered, revised and reversed needs.

The poster child for holding on to what worked in the past is Kodak. There was a time when Kodak was ubiquitous. Kodak moments brought tears and joy. But, Kodak lost its footing by clinging to haloid film as the world went digital. Kodak continued to produce what it knew how to produce rather than what produce what customers wanted. Kodak defended the past and was defeated by the present. The brand declared bankruptcy in 2012.

While Kodak was doubling down on the past, its rival, Fuji Film focused on the future. Facing the same landscape of digital over haloid, Fuji saw a bigger picture. Fuji saw itself not in the “film” business per se. Film is essentially molecules and elements. Fuji decided to use its knowledge of the science of film. Fuji scientists understood that the film used in cameras comes from collagen. Collagen is big business for youthful-looking skin. Aside from skin care, Fuji scientists began working on Ebola drugs, anti-aging potions and stem cell research. All of these products benefit from the basic science of film.

Fuji reimagined how to use its knowledge base and scientific expertise to address different customer beauty and health needs. Rather than continue to defensively focus on salvaging haloid film, Fuji took the offense and saw itself as a science company.

Kirin is taking this same approach. Kirin will be using the beer-brewing process, whereby “…sugars are converted by yeast to alcohol…” to generate biotech products. According to Financial Times, Kirin wants to grow LC-Plasma, a proprietary ingredient used in health drinks. Kirin sees the potential for LC-Plasma for beverages and foods produced by third parties.

Additionally, Kirin has a supplement called Citicoline. Citicoline is a memory-improving supplement that is already sold globally. In a world that is growing older, most especially in Japan and Europe, this supplement is a solution to an increasingly critical customer need, remembering.

In a study (Innovation Study: Beyond the buzzword) conducted by Deloitte, the global business services firm, data show that “higher growth companies spend less time looking inward and more time responding to customer needs.” These firms lead innovation with customer needs while relying less on “internal operational needs.”

Innovation is risky. But, innovation can also be incredibly successful. However, innovation is easier said than done. The Wall Street Journal’s Heard on the Street column highlighted tech companies that are pitching major change to investors but not exactly living up to their promises. The article subtlety warns investors not to fall for the “seductive” presentations. As the sub-headline states, “Virtually every technology company will tell you it is changing. Don’t believe it until you see it.” For example, Twitter co-founder and ex-CEO Jack Dorsey said he was stepping down because he wanted Twitter to evolve. The new CEO said things would change but nothing has been implemented.

Innovative ideas are what will keep brands relevant and competitive. There is nothing more powerful than an innovation in action. But, innovative creativity takes courage. 

Failure to innovate is death-wish brand management. In an ever-changing, increasingly competitive world, brands need customer-insight driven innovation to stay relevant. Innovation creates new customer value through solutions that meet new needs, unarticulated needs or old customer needs in new ways.  Continuous improvement is a constant brand-business essential. Innovation keeps brands relevant, differentiated and top-of-mind. Continuous innovation is an imperative for high quality revenue growth leading to enduring profitable growth.

Although innovation on the scale that Kirin is pursuing can be risky, throwing money at methods that worked yesterday is a massive miscalculation. Fortune favors the bold.

Technology brand-businesses are today’s most valuable, leading entities. According to the financial firm, Charles Schwab, Tesla, Apple, Amazon, Microsoft and Alphabet rule the roost. Were these brands the pioneers in their categories? Or, were these brands early leaders or followers? What does the success of our current brand-business behemoths tell us about making it for the long run? Just what does it take to go from an idea to powerful, valuable, great, enduring profitable brand-businesses?

There is a place for answers to these questions. 

In 1993, two professors, Peter Golder and Gerald Tellis, wrote an article titled, “Pioneer Advantage: Marketing Logic or Marketing Legend?” The article raised one of marketing’s most interesting questions: do pioneers in a category always grow and become great, enduring profitable brands? Or, are pioneer brands inventive but impermanent, replaced by an “early leader” or “follower” brand?

Following up on their seminal thesis, Golder and Tellis wrote, “First to Market, First to Fail? Real Causes of Enduring Market Leadership” (1996). This second article’s abstract stated that Golder and Tellis discovered “… many category pioneers fail while current brand leaders are not pioneers.” 

Reading the articles is like being in a brand-based way-back machine. The cited pioneering brands that created categories and were shining stars for their eras, all crashed, burned and faded away. But, early leaders and followers introduced other brand-businesses that became, and in many cases, still are the category winners.

For example, disposable diapers. Today, we have two brands that own the disposable diaper category: Pampers and Huggies. But, neither of these brands were the original disposable diaper. Before there were Pampers and Huggies, there was Chux. Chux arrived in 1935. Yes, 1935. Chux were expensive but “great for traveling.” In 1962, Consumer Reports magazine stated that Chux were “the best” disposable diaper. Chux was a brand from Chicopee Mills, owned by Johnson & Johnson. Several years later, both Pampers and Chux were evaluated as best buys. The rest is history. 

Golder and Tellis did not just look at packaged goods. They also focused on personal computers and video recording.

Let’s face it: we all believe that Apple opened the door to personal computing. And, what about HP? But, no. MITS (Micro Instrumentation and Telemetry Systems) was first. As stated in their article, Golder and Tellis recounted that in 1976, Business Week “referred to MITS as the IBM of home computers.” Additionally, Business Week stated that MITS was the “de facto standard” for the category as well as the industry. Okay, but today MITS is never thought about or, worse, unknown. 

As for video recording, something we really no longer need to do what with streaming, Ampex was the hands-down leader. Ampex created the video recorder. That was in 1956! An Ampex video recorder cost $50,000.

At the time, RCA and Toshiba were behind Ampex. The category was intriguing for Sony, JVC and Matsushita, however.  And again, Ampex went away while Sony, with its customer focus and $500 price tag, for example, endured and thrived.

Golder and Tellis discuss other pioneer brands that created a category and lost to later entrants. You may think that Miller Lite was the first light beer, but no. For those who live in the brand history repository, there is Gablinger’s.  Gablinger’s was a brand from Rhinegold (another long-gone brand-business). Rheingold was a favorite New York State beer brand: that once had 35% of New York’s beer market. Rheingold died in 1975. As for its light beer pioneering brand, Gablinger’s was never able to match the marketing heft of Miller Lite powered by Philip Morris. Philip Morris funded a marketing effort that few could match. Remember that Philip Morris had a lot of cash: the firm owned the Marlboro brand. 

And, there was the brand described in 1960 as “The world’s biggest chain of highway restaurants; the pioneer in restaurant franchising; a most strongly entrenched factor and highest quality investment; and, the most fabulous success story in restaurant chains.” No, not McDonald’s: Howard Johnson’s.

The annals of brand-business are littered with the detritus of dead brands, brands that were once the innovators. Golder and Tellis found that pioneer brand-businesses had a failure rate of 47%. Pioneering brand-businesses had a mean market share of 10% and “were current leaders in only 11% of categories. Early leaders, defined as “firms that enter after pioneers but assume market leadership during the early growth phase of the product life cycle,” had a minimal failure rate with a market share “three times” that of the pioneer. Early leaders were, at the time, brand-businesses that entered the category 13 years after pioneers.

The result of Golder’s and Tellis’ research found that early market leaders, have five critical factors that drive performance: 

1. Vision of the mass market, 
2. Managerial persistence, 
3. Financial commitment, 
4. Relentless innovation, and 
5. Asset leverage.

Vision of the Mass market propelled Ford Motor Company. But, it was also a factor in the success of Kodak film, Pampers and Sony. George Eastman (Kodak) saw that if film developing were made easy, more people would take pictures. Procter & Gamble used its knowledge of mass market consumer products to make disposable diapers affordable. Masaru Ibuka of Sony saw the possibility of video recorders in homes around the world. 

Managerial persistence is a mindset that focuses the enterprise on long-term commitment to a product or service. This may take years. But, as successful brand-businesses know, brand building is an ongoing, never-ending process towards a North Star. P&G was notorious for its lengthy R&D behind products as were Sony and JVC. RCA spent a decade pioneering color TVs.

Having the funds to hang in there, innovate and market matters. Financial commitment allows brand-businesses the luxury of long timeframes. And, as the Golder-Tellis research showed, it is not just having the money: it is the willingness to spend it on the vision.

Relentless innovation is critical for long-term successful performance. Pioneers have an invention. But, as we have learned with technology, there is always something new, better, smaller, faster or more creative. Firms that do not have the drive to constantly and consistently innovate, fall behind. Gillette was torpedoed by the introduction of stainless steel shaving blades from Wilkinson Sword. But, determined to maintain its market share, Gillette innovated with its Trac II, followed by the highly innovative Sensor. Wilkinson Sword had the innovations but it could not match Gillette’s financial commitment.

And, finally, the professors point out that late entrants can often become leaders in a category if they already have a dominance in a related category, assets which they can leverage. For example, in the early 1960s, Royal Crown (RC) owned the diet soda marketplace. But, both Coke (Tab) and Pepsi (Diet Pepsi) were able to leverage their dominance not only in carbonated beverages but in distribution. Wisk liquid laundry detergent (the “ring around the collar” eliminator), was such a strong brand that it was able to fend off P&G for over a decade or more until P&G agreed to make Liquid Tide in the late 1980’s.

According to Golder and Tellis, these five factors were more important in determining successful long-term leadership than having the pioneering invention. And, even though these principles were observed 36 years ago, they still hold true in our high tech digital world.

Let’s look at those brand-business stocks identified by Charles Schwab: Tesla, Apple, Amazon, Microsoft and Alphabet.

Tesla is a great example. Elon Musk did not invent the electric vehicle. The first electric car in the United States was developed in 1890–91 by William Morrison of Des Moines, Iowa. According to history, this six-passenger wagon could reach 14 miles per hour. But, vision, commitment, money and innovation has propelled Tesla into a leading position.  Lucid and Rivian have stumbled recently due to supply chain and inflation issues. Ford just announced that it will separate its electric vehicle group from its gas-powered vehicles to generate the focus needed to perform long-term. The Wall Street Journal stated that Ford wanted to channel its “inner Tesla.”

Apple did not invent the personal computer. But, it became a long-term performance-leader through relentless innovation and the driving vision, creativity and persistence of Steve Jobs, generating the financial wherewithal to continually design and innovate. Furthermore, Apple has been able to leverage its assets in personal computing into iPods, iPads and telephones.

Let’s not forget that being the store selling to everything to everyone was Sears. Amazon came in and made a digital version. Decades of commitment, vision, persistence and financial resources as well as leveraging its assets in data collection and management have led to its leadership. Financial commitment behind a vision allowed Amazon to buy Whole Foods. Amazon is now leveraging its digital adeptness into changing the grocery experience.

Microsoft did not invent software. But co-founder Bill Gates had a vision for mass software usage. He wanted to see a world where there was a computer on every desk. Microsoft did not make computers or desks. But the firm recognized the massive mass power of the software that ran these computers. Persistence, vision, innovation, and eventually, asset leverage, allowed Microsoft to grow and become ubiquitous.

Alphabet’s Google did not create the Internet not did it create the search engine. Its founders created a better way to search on the Internet. Again, the vision was for anyone who wanted to search the Internet, the information would be easily accessed. Persistence and continuing innovation propelled the enterprise to where it is today. Alphabet currently leverages its data, digital expertise and innovation across a broad spectrum of companies

Although none of these companies were pioneers, they are now five of the most valuable brand-businesses on this planet. Start-ups should pay attention. As Golder and Tellis conclude, “… being first to market by itself is neither necessary nor sufficient for enduring market leadership.” Seeing the mass potential, having managerial persistence, the availability of funds to power the idea, being relentless in innovation and being able to leverage established assets are what make or, if not there, break a brand-business.