1/ I promised you a thread on branding sometime back, when we were talking about 7 Powers. So let's do it. How do you build a great brand?
Brands take decades to build, so the more useful question is actually: what does it LOOK LIKE when you're getting a branding moat to work?
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2/ This in turn means you'll have to dig into the biographies of primary actors if you want a good understanding of real-world brand building.
Read the histories of Estee Lauder, and Nike, and Coke.
I've spent a couple of months doing that.
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3/ The answer might be a little disappointing to you: the glib version is that they SURVIVED.
This might not be clear if you think about brands today. You've probably drunk Coke, taken a Pfizer shot, or heard of Hermes (that's a Birkin below).
In each case, they survived.
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4/ The fact of their survival is more important than the trappings of the brand itself. It's more important than fonts. More important than logos. More important than brand colours.
Survival is about enabling consistency over the long, long term.
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5/ But survival also means that they outcompeted or out-innovated rivals in the short term, in order to generate differentiated margins for a brief period of time.
And, yes, they didn't do terminally stupid things. They didn't die.
This is — as you might expect — bloody hard.
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6/ Here's a visceral example.
In 2017 Nike released the Vaporfly — a shoe that gave runners a 4% edge in running economy. By 2019, all the major marathon runners were wearing Vaporflys.
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7/ By late 2020, all the other major brands had caught up. Hoka, Adidas, Brooks, Asics — they each had a response to the Vaporfly, and their shoes began showing up amongst top runners. You may watch Seth's analysis of the London marathon here:
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8/ This mean that Nike's tech advantage with the Vaporfly lasted only 3-4 years. It was a short term advantage, at most.
But so what? This is what brand building looks like up close: lots of short term advantages over a multi-decade period. (Think: Flyknits, Nike Air, etc)
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9/ I think this is the bit about brand building that gets missed the most. The way to build a great brand is to be consistent over the long term, even as you fight the knife fight in the here and now.
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10/ Take Estee Lauder, for instance.
In his biography, Leonard Lauder writes about building his mother's company over the course of 5 decades. The 'Revlon Wars' takes up two chapters in his book. It was ruthless. Both companies each came up with directly competing products.
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11/ Lauder's innovations were relentless. He launched Re-Nutriv in 1959, the first cream that positioned itself as a luxury product (that position is now occupied by La Mer, another brand acquired by Estee Lauder decades later).
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12/ You can see Lauder's evolution as a brand strategist over the course of the 60s. With Re-Nutriv, the 'positioning WAS the product'.
But it was a temporary edge, at most.
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13/ "Each Estee Lauder launch was like flapping a red cape at an already enraged bull. Now we *had* to come up with good ideas—and lots of them—to stay ahead of Revlon and stay alive."
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14/ This competitive, 'Red Queen' dynamic was what caused Lauder to finally discover his 'brand creation and acquisition strategy'.
"How could I prevent us from becoming everyone's target?" he writes.
And so in 1968, Lauder created their first new brand: Clinique.
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15/ Over the next few decades, Lauder leaned into this strategy. He called it his 'navy strategy' — create or acquire new, smaller brands, which would act as a screen for the main brands.
This is a strategy that's still at play today. But Lauder discovered it by trial & error.
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16/ In 7 Powers, Hamilton Helmer writes that branding's moat comes from 'hysteresis'. That is, a 'lengthy period of reinforcing actions.'
That's pretty accurate. But it doesn't capture what that feels like.
What it feels like is this: a knife fight in the here and now.
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17/ My thread on 7 Powers for operators:
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If you’re an investor or analyst, 7 Powers is a remarkable lens you can use to analyse companies.
But if you’re an operator, the book is a little … weirder. What I mean by this: the path to Power is totally weird and unique, and it’s more important to pay attention to that.
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18/ And if you'd like a thread on Process Power (the competitive advantage enjoyed by Toyota and Zara):
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Alright, let's talk about Process Power. I'm probably going to write a post titled 'People Don't Seem To Understand Process Power' soon, because people seem to take it to mean 'oh, processes that are difficult to copy'.
Which, yes, but how difficult?
twitter.com/ejames_c/statu
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19/ Finally, my blog post on 7 Powers in practice looks at what these competitive advantages actually look like when they're being built:
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20/ Subscribe for more threads on business or career decision making. I'll be doing one on product taste soon.
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