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Apple Inc., Leadership Brands, and Team Brands

The Wall Street Journal yesterday reported a shake-up at Apple (http://online.wsj.com/article/SB10001424052970204840504578089102411834238.html?KEYWORDS=Apple+Shake-up+signals+Tim+Cook+era) with several executives leaving the organization. The article reported that some of those leaving, e.g., Mr. Forstall, the head of mobile software, had irreconcilable differences with other employees, to the point of not even talking to each other on projects that required their joint inputs. The Wall Street Journal reported “Messrs. Ive [head of hardware design] and Forstall clashed so severely in recent years that they avoided being in the same room together… ‘They didn’t cooperate at any level,’ one of the people close to the matter said. ‘They always let Steve decide.’” This highlights a key challenge for organizations that are highly centralized behind an iconic leader, as was the case for Apple, until recently. How does one manage the transition in leadership that inevitably must come?

Before we go there, let us describe the nature of such brands which we call leadership brands. Leadership brands are brands that are built around the ideals and aspirations of the leader, who is also often the founder of the company. Such leaders are often dictatorial and hands on, making every critical decision themselves. Whether they are right or wrong, strong leaders, like Steve Jobs, bring with them strong personalities that distinguish them apart from the competition and it is also their strong personalities that attract like-minded employees and intrigue the consumers of their brand.

When the leader around whom the leadership brand is constructed steps aside, the brand and the …

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Back to focus, focus, focus!

Sitting in New Delhi airport waiting for my flight to Bangalore my thoughts moved to the recent turmoil in Vijay Mallya’s business empire. United Distillers, one of the pieces of the puzzle, and the world’s biggest distiller by volume, had to sell a majority stake to DIAGEO for a much needed infusion of some $2 billion! In the words of the great bard, William Shakespeare, for Vijay Mallya, “Oh, what a fall was there, my countrymen!” Losses in its Kingfisher Airline business have had the flamboyant Indian tycoon on the ropes for a while, and a solution along the lines of that inked with DIAGEO was all but inevitable.

What remains interesting to me is the lack of understanding of the need for focus among entrepreneurs and business leaders. Strong businesses are focused. Having a portfolio of businesses spanning distilling, brewing, airlines, and sports (Bangalore Royal Challengers T20 team) doesn’t allow for the depth of understanding of either the target consumers or business models to serve them, to compete in a sustainable and successful way. We see the same across markets. Consider China’s BYD, BYD’s shares have plummeted as they moved from the battery business in to automobiles and the firm has gone from being the darling of the stock market to pariah status in short order.

One hopes that businesses will take the lesson of focus to heart. Focus helps target a firms resources and cement a clear brand identity in consumer’s minds. Thus, for instance, Coca Cola has …

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Global Consumers–Still Coming of Age in India

Standing inside the Palladium Mall which is the posh part of the Phoenix Mall in Mumbai, at the site of the old Phoenix Mill—a textile mill that became defunct a long time ago, one sees how the retail landscape in India has changed in the short course of 20 years, since liberalization was ushered in 1991 under the Narasimha Rao government. Emporio Armani, Boss, Canali, Chanel, Zegna, Gucci, DKNY, Diesel, Swarovski, Rosenthal, Tag Heuer and other names synonymous with luxury jostle for space as a pianist strikes up relaxed tunes on a grand piano under the soaring ceiling.

At the same time the youth of the transformation is visible. Right next to Chanel and across the aisle from Burberry, right next to the main entrance sits Zara, the fast fashion giant that while hugely successful can hardly be called “luxury”. Wander a little more and you see a Giordano outlet! This is even lower end than Zara and hails from Hong Kong where I remember buying cheap clothes when I lived in Hong Kong some 16 years ago! Clearly, the mystique of luxury and the mystique of “foreign” have become confounded in the burgeoning consumer culture in India. In time, with maturity, perhaps such oddities will disappear. Or, perhaps, in India, Zara and Giordano will become “luxury”. Now that’s a thought.

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Brand Fit: Mahindra & Mahindra and Aston Martin!

I am surprised at the reports that M&M is considering a 50% stake in Aston Martin, the iconic and legendary British sports car brand long favored by no less than 007. Why am I surprised? After all, this is one hell of a brand!

The reason is that Aston Martin simply does not fit with what M&M is all about. M&M is a powerhouse in SUVs and UVs. It has a brilliant portfolio, having just launched the Rexton from its SsangYong stables. The year-old XUV-500 is a runaway bestseller with a continuing 5-month waitlist, even as M&M has ramped production to 5000 of these vehicles monthly. Not to mention its other successful brands like Xylo, Scorpio, Bolero, and others. A sports car, particularly a super-luxury sports car like Aston Martin simply does not fit with M&M’s portfolio.

And I am not saying this out of thin air. In many conversations with top executives (see our book The New Emerging Market Multinationals), I have been told that M&M is all about making “honest” UVs and SUVs. This is why it backed out of the bidding for JLR in 2008, according to these same executives, as it was primarily interested in the Land Rover brand, and not Jaguar. Indeed, M&M’s forays in to regular automobiles, starting with its JV with Ford over two decades ago, have never been terribly successful. So, moving even further away from its core business—honest, reliable, durable, and value-for-money UVs and SUVs—by buying a super-luxury sports car brand …

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Why it is wrong to expect the government to treat Kingfisher Airlines and Air India the same! (by Amitava Chattopadhyay)

“Bail out Kingfisher like Air India” reads the headline of an article in Business Line today (November 27, 2012; p. 4). The article goes on to say that Assocham has asked the government to “provide a similar kind of financial help to Kingfisher Airlines, as extended to state-owned Air India” since independent of whether an organization is public or private, the “resources belong to the nation and should not be allowed to go down the drain.” I am shocked at the ridiculousness of the argument! The public sector exists to serve the nation, the private sector to serve the shareholders. Those shareholders, as far as Kingfisher Airlines is concerned is hardly the “nation”.

Importantly, why does the government bailout Air India? Or for that matter other public institutions. Perhaps the most significant reason is to control the private sector for the greater good of the nation. Having Air India and its lower than private sector fares, creates a ceiling on consumers’ willingness to pay for air travel by creating a perceptual anchor for what airfares should be. Without Air India, we would have much higher air fares in India, and the additional profits would flow in to the pockets of the promoters and other shareholders, not in to the pockets of the citizens, as it does now, through the lower prices that prevail. One wonders, what drives Assocham to make the statement it apparently has according to today’s Business Line.…

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