And although Google, Facebook, or Amazon might stumble and be crushed by some upstart, the competitive positions of those giants hardly look fleeting. A full two decades later those companies are still at the top of their respective industries, pursuing largely unchanged strategies and branding. Consider Southwest Airlines, Vanguard, and IKEA, all featured in Michael Porter’s classic 1996 HBR article “ What Is Strategy?” as exemplars of long-lived competitive advantage. That’s an edgy thought, to be sure but a lot of evidence contradicts it. Hence Instagram was doing exactly what it was supposed to do: changing proactively. To keep your customers-and to attract new ones-you need to remain relevant and superior. Much new thinking in strategy argues that the fast pace of change in modern business (perhaps nowhere more obvious than in the app world) means no competitive advantage is sustainable, so companies must continually update their business models, strategies, and communications to respond in real time to the explosion of choice that ever more sophisticated consumers now face. The answer, we believe, is rooted in some serious misperceptions about the nature of competitive advantage. (It’s worth noting that Snapchat, whose market share among young users is now particularly strong, has assiduously stuck to its familiar ghost icon. The interesting question, therefore, is: Why do well-performing companies routinely succumb to the lure of radical rebranding? One could understand the temptation to adopt such a strategy in the face of disaster, but Instagram, PepsiCo, and Coke were hardly staring into the abyss. PepsiCo’s introduction of its aspartame-free Diet Pepsi was-like the infamous New Coke debacle-a botched attempt at reinvention that resulted in serious revenue losses and had to be reversed. It’s too soon to tell whether the design change will actually have commercial consequences for Instagram, but this is not the first time a company has experienced such a reaction to a rebranding or a relaunch. Can We Change it Back? Please?” In GQ’s article “Logo Change No One Wanted Just Came to Instagram,” the magazine’s panel of designers called the new icon “honestly horrible,” “so ugly,” and “trash,” and summarized the change thus: “Instagram spent YEARS building up visual brand equity with its existing logo, training users where to tap, and now instead of iterating on that, it’s flushing it all down the toilet for the homescreen equivalent of a Starburst.” The assessment of AdWeek, the marketing industry bible, was clear from its headline: “Instagram’s New Logo Is a Travesty. A clever ad may win awards, but if its message is too complex, it will backfire. For customers, “improved” is much more comfortable than “new.” Changes in product features should be introduced in a way that retains cumulative advantage. Efforts to “relaunch” brands can lead people to break their habits. When the company redesigned the bottle so that customers would keep it in a more visible spot, they ended up using it more often. The problem, it turned out, was that the product came in what looked like a glass-cleaner bottle, so users kept it under the sink. When P&G introduced Febreze, consumers liked it but didn’t use it much. Back in 1946, Procter & Gamble gave away a box of Tide with every washing machine sold in America.ĭesign for habit. Lafley and Martin offer guidance for building cumulative advantage:īecome popular early. And each time they select it, its advantage increases over that of the products or services they didn’t choose, creating what the authors call cumulative advantage. They choose the leading product in the market primarily because that is the easiest thing to do. Research suggests that what makes competitive advantage truly sustainable is helping consumers avoid having to make a choice. Martin, the authors of “Customer Loyalty Is Overrated,” is rooted in serious misperceptions about the nature of competitive advantage-namely, that companies need to continually update their business models, strategies, and communications to respond to the explosion of options that sophisticated consumers face. Why do companies routinely succumb to the lure of rebranding? The answer, say A.G.
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