Google to Alphabet: smart move but not radical at all

First published in Marketing Magazine 11th August 2015

The move from Google to Alphabet is far from radical; it’s well trodden as a business model by FMCG giants like P&G and Unilever, argues Justin Basini, co-founder and CEO at ClearScore.

With the creation of a holding company called Alphabet they are starting to look more like a Procter & Gamble or Unilever

The blog post announcing the rebranding of the Google into Alphabet this morning has taken everyone a bit by surprise. The markets have generally reacted positively with a 5% rise in the stock with the normal commentary both good and bad. We should admire Larry, Sergey and Eric that for once, in our world of obsessive management of investor expectations they have actually managed to steal a march on the millions of eyes watching Google.

Tradtional and well proven model

Many commentators have hailed this as a “radical” restructure adopting a model akin to Berkshire Hathaway. However, from a brand management perspective the move is treading a traditional and well proven model. With the creation of a holding company called Alphabet they are starting to look more like a Procter & Gamble or Unilever: that is a holding company with a wide portfolio of businesses and brand assets. The manifest benefits of this approach that has served the packaged good behemoths for over 100 years will deliver undoubted benefit to Google going forward.

Nobody likes companies that are too powerful, witness the fall of Tesco as it sought to become ubiquitous and got out of control

There are consumer benefits. Nobody likes companies that are too powerful. Witness the fall of Tesco as it sought to become ubiquitous and got out of control. Imagine if the brands we buy from P&G were not Ariel, Fairy, Pantene, Pampers, Gilette, Max Factor, Oral-B, Duracell, Lenor, Clearblue, Vicks but all of them called Procter & Gamble? We would start to freak out that one company could be so pervasive and dominant in our lives. As Google has broadened their offerings from search to email, to office apps, to mobile phones, to laptops, to household control, to cars; all of these being linked very clearly to the Google name creates the same concerns and worries. Moving to a house of brands under Alphabet will help manage some of these risks and drive growth.

Privacy concerns will manifest at Alphabet

The establishment of lots of different brands potentially may make it considerably harder for us to all understand where our data and information is going

Next, whilst taking the brand benefit, the establishment of a central infrastructure for Alphabet with central management and resources will allow assets to be shared across the different businesses. It is in this sharing that I think the most concerns may arise. Collection and manipulation of data, often playing close to privacy concerns, is hard-wired into Google and will therefore manifest itself at Alphabet. The establishment of lots of different brands potentially may make it considerably harder for us to all understand where our data and information is going. If I use Google search is this going to be shared with my separately branded self-driving car or my central home control unit?

Google has struggled with transparency

I’d also bet that Twitter will be an Alphabet company in the next 12 months

Brand trust is built through transparency and openness. Google has struggled with this in the past and many people don’t trust the brand. This potentially becomes much more complex in a holding company structure. For perspective, the consumer packaged goods companies have wrestled with this as well. They know a huge amount about their consumers across different brands and have experimented with cross promotion by using this understanding at a holding brand level, exploring whether consumers want a direct relationship with the P&G or Unilever brand. Results have been very patchy – people tend to be more suspicious and wary, rather than welcoming. In our hearts we like products and brands that do one thing well, rather than interacting with huge mega-corporations that know rather too much about our habits for comfort.

Alphabet is an engineering company, not an ad business

The last reason why this strategic change shouldn’t surprise is that it is a natural fulfilment of the vision that Sergey Brin and Larry Page outlined 11 years ago when they founded the Google. They have always wanted Google to be an engineering company in the broadest sense. Google is now an information and advertising business. The move to establishing Alphabet allows them to build different competencies and leverage different structures to solve a broader set of problems. Given the astonishing rise of Google and the undoubted benefit that it has brought to the world and all of us in such a short space of time this could be really exciting.

I predict that the move to Alphabet will be successful and create value for shareholders, and hopefully the world. I’d also bet that Twitter will be an Alphabet company in the next 12 months!

CAN YOU CONNECT WITH REALITY?

 

Fear will continue to be the dominant trend of the coming years. As we continue to deal with the fallout from the financial collapse, repay our individual and national debts and deal with the environmental consequences of an economy built on mass consumption being able to connect and deal with consumer frustrations and fears will be increasingly important.

Understanding the risks and fears that a consumer is taking and helping them deal with these realities can create deeper, more profitable relationships. But understanding risk and fear is something modern marketers don’t seem to be very good at. Lucian Camp, Chairman of the advertising group Tangible and an independent consultant looked at the communications of financial products in the 1990s recession in the UK, and compared them with those in the current economic difficulties.

He found many of the brands in the 1990s recession used the harsh realities of unemployment and economic instability to connect with their potential consumer and sell product. Fast-forward to the recession of the last few years and financial advertising has continued to be dominated by the ‘people dancing down the beach happily,’ or happy-go-lucky sort of creative. Focusing overly on the positive means that the realities of life are largely denied in marketing. The risk is that brands become even more fantastic and less about solving day-to-day issues.

Most of us have only practised our trade in good times and therefore its unsurprising that we find it difficult to connect through risk and more downbeat messages. Going back to basics and understanding the role and real consumer needs that we are targeting and getting comfortable talking about difficult, potentially fear based situations, will be a skill that we would be wise to learn.

For the complete guide on how to create trust in your businesses and brands get your copy of Why Should Anyone Buy from You? BUY NOW

HUMBLE IN THE FACE OF YOUR CUSTOMER

Excerpts from my interview with Nigel Gilbert – CMO of Virgin Media and former CMO Lloyds Banking Group

“All institutions, but especially financial services ignore a lack of trust at their peril. One of the positive outcomes that I hope from the recent difficult period is a diminishment of the arrogance that businesses have often treated their customers and clients with in the past. Arrogance is a deeply untrustworthy and unattractive trait. You should always be humble in the face of your customer. They have a choice and you shouldn’t simply assume their loyalty. ”

“They must look into their own hearts and really see what they are doing. There is often a dichotomy between what companies say they are about and what they actually do – their actions and their words are different. Organisations need to be more forensic about their activities, the impact of their actions and how they are perceived.”

For the complete guide on how to create trust in your businesses and brands get your copy of Why Should Anyone Buy from You? BUY NOW

STICK TO YOUR STORY

There is huge power in having control over your brand’s narrative and its evolution. To watch Steve Jobs delivering an Apple presentation about their latest product is to witness a brand completely in control of the development and evolution of their narrative.

Don’t fall into the short-sighted trap of focusing on one campaign at a time, especially when the pressure is to acquire new customers or drive volume. Any new communication must be seen within the context of past and future promises.

The best brands:

  • Understand and build on previous messages.
  • Commit to and reinforce key benefits.
  • Bring to life their mission, motivations and the culture through their actual achievements.

These are the characteristics that help brands move forward and develop consistent space in people’s minds.

For the complete guide on how to create trust in your businesses and brands get your copy of Why Should Anyone Buy from You? BUY NOW

 

DID BRANDING KILL THE MARKETING STAR?

Ask most people in and out of business about branding and they will tell you its the name, colours, and logos of a company. Ask them about marketing and they say it is about flogging more stuff. But surely CEOs and other senior managers don't think this do they? They must understand the strategic importance of positioning and segmentation as we brand a company. Or the complexities of consumer insight, proposition development, and pricing as we create consideration and preference, generating ROMI, as we market.

Actually in most businesses I think the strategic understanding of these opportunities and processes is poor even at the highest levels. And we, as marketers, do a bad job of communicating these differences; we are supposed to be experts at getting ideas to spread – yet we can't even do it with our own profession. This is compounded by the modern obsession with branding and brand value.

Go back to the 1930s and marketing was a pretty basic process of simple advertising shifting more product. Sure Procter & Gamble were "managing brands" but most marketers were just flogging stuff that they didn't have much of a hand in developing. Most of the interesting work was happening in PR. Following the Second World War and strategic marketing starts to take off. I insisted that anyone who worked for me read the classic Theodore Levitt HBR paper Marketing Myopia (if you work in marketing and haven't read it shame on you). Levitt made the case for marketing to move beyond a sales stimulation function to one that created value through owning the process by which a company could tap into consumer needs and create branded propositions which became long term profitable assets.

Marketing was doing OK during the 1950s and 60s. The post war growth in consumerism proved the case day after day that this strategic approach to marketing worked. The marketer was a respected member of the team. But then something started to breakdown. Whether it was the oil crises of the 1970s putting the break on consumption or cost cutting in the 1980s, or the rise of the services sector in the 1990s, marketers seemed to lose the strategic agenda. Suddenly brand was the asset we were all managing. The marketing process seemed to lose its magic at creating tangible value and was replaced by intangible value. Companies started investing in their brands – there was money to be made, and value to be built, through the name and logo. Run a few workshops, develop a few names and designs, and then implement. Even better that the CEO was prepared to attend some of the workshops! This was much easier than working in the strategic marketing salt mines. This focus on the surface was conveniently supported by the prevailing Zeitgeist of the 1990s and 2000s. Fashion and celebrity was what caught people's attention.

I think we are at a turning point once more. The worst recession since the 1930s has broken something again. We are still in the eye of the storm but opportunity comes from thinking about the long term impacts. It's ironic that in all major recessions innovation and entrepreneurship actually increase despite the economy tanking. Talent comes out of big businesses and capital chases new ideas as returns wither elsewhere. The successful innovative start-ups disrupt markets and steal share from incumbents. They are closer to their customers, deliver better value and find profitable niches.  In turn this means that the incumbents need to raise their game. Richard Lambert, the Director General of the CBI, said at the RSA on Monday night that the last 20 years had been an aberration of business and capitalism. The link between access to capital and risk was weakened and seemingly "leverage" (or debt to you and me) was seen as an almost guaranteed way to make money. The broader impact of businesses on society and humanity was subsumed by the out of control growth obsessed markets. We now see it was all so unsustainable.

Forgetting humanity when humanity is your route to productivity, customer satisfaction, and even investment was clearly never a long term winner. This gives marketers the biggest opportunity for decades to re-engage and move away from the surface obsession with branding and go back to creating extraordinary value by leading the charge of putting humanity back into business. That's what a marketer has the potential to deliver on the board. Combine this with creative vision and an ability to communicate and we might just see the re-emergence of strategic marketing and marketers as long term value creators.

What do you think? Do you think that marketing needs to reclaim a strategic agenda? What's your experience?

Please comment and share your view below. 

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Justin

Mail me: justin@basini.com

My website and blog: http://www.basini.com/

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2 min Video book review: Cradle to Cradle

Last week I read a fantastic book called Cradle to Cradle about eco-effective product design. Really easy to read and really mind expanding. Definitely a read for all those involved in designing and delivering products.

Here is a link to it on Amazon (its an affiliate link so you know!) and my two minute video review.

I am thinking of doing a series of these video book reviews. Please give me feedback on whether you think they work and what I should include.

Here is also a TED talk by William Mcdonough on the key concepts.

What do you think? Leave a comment below and share these important concepts.

Thanks

Justin

Mail me: justin@basini.com
My website: http://www.basini.com/
Read my blog: http://www.blog.basini.com/
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Financial Services brands: it’s not about being different but making a difference

New blog following a debate at the Financial Services Forum this morning.

Justin Basini

Thinking about marketing, branding and advertising.
Open for chatting, collaborating and consulting.

justin@basini.com

+44 (0)7786548395

Visit my website at: http://www.basini.com

Read my blog at: http://www.blog.basini.com

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Brands: if you want trust give trust


Brands and businesses always want to be trusted. But rarely do they trust their customers to understand how business works. This is why most organisations mission or values statements don’t include simple direct statements of what businesses are there, in part, to do which is make money. Businesses and corporations assume that we distrust them and therefore act defensively. In some cases, often the high profile ones, covered by the media, this default position of distrust is right but the vast majority of businesses, those that many of us work for, and employ our friends and family members, are full of good people trying to deliver well for their customers and make a fair profit in return, and money for themselves.

But most businesses, especially the big ones, are pathologically scared of saying anything that isn’t on message. And those messages are devoid of reality because they just don’t trust normal people to understand that running businesses is not easy, a balancing act and they have to make a return on their efforts. The cancer in these organisations are the public relations and corporate affairs departments that are obsessed with controlling the message, saying as little as possible, and where success is staying hidden.

In my experience most people are fair and reasonable. We understand that businesses need to make money, but we want them to give us good services and not exploit us for super-profitability. But most corporations treat us like we are cynical, conspiracy theorists or anti-business. And this has created a culture, especially in Britain, France and Germany, where making a profit is seen as inherently exploitative and almost immoral.

Witness John Petter from BT this morning (12th Feb 2010) on BBC Breakfast. Since BBC doesn’t replay Breakfast (can someone upload the interview to YouTube? YES ITS HERE) I’ll give a sense of the Tweets that were going round that summarise his performance:

jhemusinsignia: BT spokesman on BBC Breakfast was v.poor: why are people lacking the necessary skills put forward? Train them or use someone else
charlie74: BBC Breakfast presenter grilling the BT rep on TV… loved it
Tommy_Hill: Anyone else think the BT guy was seriously floundering on BBCBreakfast? “I don’t know if we’ll make money on it”.. Bulls**t
zenemu: #BT chap who was just on the BBC was a bit of a worm. BT are changing free evening calls from 6pm to 7. Odious little man from awful company
RAIPR: Wtchng John Petter, BT directr justify 7pm off-peak move on BBC. Nervy, defensive, dncng feet, looking away from cam, stuttering #fail
imogenfarr: Anyone see the BBC Breakfast interview with the squirming BTspokesperson? Blimey, he’d never have coped if he was interrogated by Paxman.



There is no doubt that his performance this morning was very poor but I suspect rather than being a consequence of not enough media training, it was caused by too much media training. Having been through several versions of this torture myself these sessions are focused on Corporate Affairs/Public Relations/Media people drilling you. “Don’t say this, say that”, “don’t answer questions directly” and most importantly don’t tell the truth. Don’t lie, don’t tell the truth, better to not say anything at all.

This goes right to the heart of the way that businesses present themselves currently. There is no longer a recognition, a trust, that we understand how businesses work. Read the mission and values of BT (taken from their website this morning):


Our vision

Our vision is to be dedicated to helping customers thrive in a changing world. The world we live in and the way we communicate are changing, and we believe in progress, growth and possibility. We want to help all our customers make their lives and businesses better with products and services that are tailored to their needs and easy to use.
This means getting ever closer to customers, understanding their lifestyles and their businesses, and establishing long-term relationships with them.
We’re passionate about customers and are working to meet the needs they have today and innovating to meet the needs they will have tomorrow.

Our values

Our corporate identity defines the kind of company we are now and the one we need to be in the future.
Central to that identity is a commitment to create ways to help customers thrive in a changing world. To do this we must live our brand values:
  • Trustworthy – we do what we say we will
  • Helpful – we work as one team
  • Inspiring – we create new possibilities
  • Straightforward – we make things clear
  • Heart – we believe in what we do
We are committed to contributing positively to society and to a sustainable future. This is part of the heart of BT.”

I can guarantee that John Petter and his boss Gavin Patterson spend most of their time obsessing about how they can organise their business to make money, grow and be cost efficient, whilst giving a good service. That’s what they get rewarded for. And yet making a fair return, making money for themselves and their employees, is no where to be seen in the mission and values of BT. These vision, mission and values statements have become divorced from reality, and its not just BT that suffer this problem.

Every business person that goes through a media training torture session comes out scared to death of saying anything, and is certainly left with the impression that having an open conversation about working hard to deliver value whilst making money is completely “off message”.

That’s what you could hear this morning from Mr Petter. His message was “buy unlimited packages” and he automaton-like repeated this time and time again. Charlie Stayt asked for a commitment from him that the prices would always be better value now and in the future, something which was impossible to answer on the couch in a studio. But instead of calmly responding, as Mr Petter might in a normal conversation with you or me, that BT always wanted to be good value, but that these decisions needed to be properly planned his only reply was “buy unlimited packages”. He thereby demonstrated that he didn’t trust those listening to his interview to conclude that he was a reasonable man with a reasonable approach and, yep, these things generally needed to be thought about.

Even when Susannah Reid asked him directly why he didn’t just explain that giving customers free calls meant that they didn’t make enough money, he wasn’t brave or trusting enough, to agree and admit that giving a good service and making a fair profit was what they were trying to do. All he could say was “buy unlimited packages”.

I felt sorry for John Petter this morning, a classic victim of media training where the goal is to say nothing, and a corporate and cultural context where trusting people to understand that businesses are there to try and give good services that we all need, and make a fair profit in return, is unacceptable.

Unfortunately until brands and businesses start to wake up to the fact that trust is a two way relationship, they will never win our trust.

Did you see the interview this morning. What do you think?
Do you work for BT? How did you feel?
Have you been media trained? What is your experience?

Please comment below and share with others using the social media icons.

Thanks – have a lovely, non-business, non-brand, non-marketing weekend and Valentine’s day.

Justin

Mail me: justin@basini.com
My website: http://www.basini.com/
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MORALITY & BANKING

Yesterday I attended a talk at the RSA by John Lanchester who has recently written a book called Whoops! about the credit crunch.
The talk and subsequent questioning was mostly about the role of culture and regulation in banking; with the audience and speaker exploring how to develop a system that might be more sustainable.
I wrote a blog called Banking and the Common Good a while back which explored how the concept of common good could be placed as a central focus of a financial institution. Today’s blog picks up on some of these concepts.
The question is how we create a banking system that actually balances commercial objectives with social objectives that deliver benefit to the common good. I believe that a new language of responsibility needs to be imposed on the banks. Nearly all banks will tutor their leaders in Business Ethics; all banks have values statements that will include some version of “doing the right thing”.
But despite these words and intentions we still have a system that doesn’t in aggregate and from a macro-economic perspective deliver “the right thing” and act ethically in its impact. The frustration is that there are very few financial institutions that deliberately act in a clearly unethical way decision by decision, action by action, but in aggregate the effect is destructive.
The heart of the issue for me is one of what banks, especially investment banks, markets focused institutions and bank leadership more generally, value. And that is money, to this everything else is subservient. This is why banks are so successful, they have created extremely efficient systems for maximising profit to the exclusion of virtually all else. This creates inattentional blindness, which is the psychological phenomenon of being “blind” to anything apart from that which you are concentrating on, add hubris and you have a system that builds risk and is narrowly focused on one immediate outcome.
This valuing of one outcome only, with little assessment of second and third order effects and impacts, allows for a culture to become devoid of morals. And that moral bankruptcy turned into financial bankruptcy.
So what to do? Remembering that business ethics and values were taught and “on the wall” at our big financial institutions and offered no protection.
I would advocate a complete reversal of the incentive systems at our banks. We need an incentive system that puts most emphasis on demonstrating moral action and joined up thinking rather than seeking risk for greater return. This should be in an overtly, openly discussed moral framework. Leaders in these organisations need to become expert not just in maths and playing the markets, but seeing the impact of their business on different stakeholders and balancing this for commercial and social return.
Morality is at the very heart of our economic system. Adam Smith’s conception of markets was built on predictable outcomes between buyer and seller. The foundations of these predictable outcomes, in a time when regulation and rules of commerce were much less regimented and established than they are now, were moral action from individuals. I don’t think it is surprising that The Theory of Moral Sentiments, that Smith wrote 15 years prior to The Wealth of Nations and the majority of the books in The Wealth deal with how individuals living in society should conduct themselves. In order for the invisible hand, specialisation and the market dynamic to work as a value exchange there needs to be trust and in Smith’s conception this comes from morality.
This morality will need to be imposed. Major financial institutions have regressed back to the status quo, as John Lanchester said yesterday “the system is as risky as ever”. They will never voluntarily accept any balances to their earning power. So this will need to come from changed systems of regulation.
But this creates a paradox in that regulation, with its rule based approach, enables a moral vacuum by replacing human judgement with an attitude of “if we stay within the rules we are acting responsibly”. Ironically the FSA (the UK bank regulator) knew this. Over the past few years anyone working in a UK bank will be familiar with the pre-crash mantra of “principle based regulation”. No longer were we to work just within the “rules” but to their spirit. It didn’t work because it stayed at the surface, and people’s behaviour doesn’t change, in many cases the people need to change.
By changing what is valued in banks this will change who progresses within the organisations. This will be a key to unlock a new system. Let’s open up board positions on banks to a wider audience. What’s clear from the past two years is that having a career in banking behind you doesn’t give you any special insight or understanding so let’s have a more diverse group from environmentalists, to community leaders, to customers, having a real voice in the running of financial institutions.
It has been said that markets are amoral. That maybe true but they don’t work unless their participants act morally. Creating moral financial institutions working for commercial gain and the social common good is the challenge.

Please comment below and share using the social bookmark icons. Thanks as ever for reading.

Justin

Mail me: justin@basini.com
My website: http://www.basini.com/
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Trendhunter Pro – cutting edge trend hunting from around the globe


Last year I recommended the best selling book – Exploiting Chaos – by a friend of mine Jeremy Gutsche.

Jeremy’s website Trend Hunter continues to go from strength to strength. His model is fascinating. He has thousands of “trend hunters” posting interesting content about stuff happening all over the world. But what I really love is the way that they are exploiting and developing insight from this content.

The guys have launched a new service called TrendHunter Pro Trend Reports. These are great syntheses of what is hot from all the content posted on Trend Hunter. If you are in consumer insight or want to know about the real cutting edge trends happening now then they are worth looking at. Trend Hunter is great example of how powerful the democratisation of the creation of content is to delivering insight and value.

Click here to visit Trend Hunter.

[Disclosure: If you buy through the above link then I receive a commission on this sale. This does not affect my recommendation of what I think is a good product. If you prefer not to recognise my recommendation through a commission then you can use this link: www.trendhunter.com]

Have fun exploiting what’s hot and what’s not!

Justin

Mail me: justin@basini.com
My website: http://www.basini.com/
Read my blog: http://www.blog.basini.com/
Follow me: www.twitter.com/justinbasini

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