Wednesday, March 23, 2005

Corporate America Eats Its Young: GM Kills Its Brands

You can't pick up a newspaper -- or more accurately, scan a web page
-- without reading about the some bizarre human atrocity. It might
be a political beheading. Maybe a military torture. But no ritual
sacrifice, no satanic ceremony can possibly rival the horror of
watching a parent devouring its young.

It's sick. It's disgusting. And now it's become a common practice
of American business.

Throughout America, the major brands that haven't been starved to
death by neglect are slowly being consumed by their own incompetence.
Such is the case with General Motors -- once the most powerful brand
in the world -- who this week announced that it would likely kill off
some of its brands "if its weaker car brands if sales fail to meet

According to Reuters news service, "GM Vice Chairman Bob Lutz did not
specify which car might be dropped but described Buick and Pontiac as
'damaged brands' due to lack of investment over the years, and told a
Morgan Stanley automotive conference in New York that GM is working
to correct that with an array of new vehicles coming to market."

Damaged? Anyone want take a guess as to who actually inflicted the
damage? I feel like I'm watching family movies at the Yates' house.
There's mother, smiling with the kids, none of whom have the
slightest inkling of their impending doom.

It's not enough that GM has already killed off the Oldsmobile and all
the brand equity that went with it. Nor has GM seemed to notice how
badly it has damaged its relationship with both its retail network --
and the public -- by offering the largest "sales incentives" in its
history. Apparently, bribing the public into the showrooms with
"cash back incentives" wasn't enough, and now GM is left in even
worse shape than before. So GM is planning to do to its offspring
what every maladjusted, ignorant parent would do to its troubled
kids: killing them off.

In the human world, I'm constantly amazed at the number of people who
procreate while remaining totally unprepared for parenthood. They
give no thought to the trials and tribulations of raising a child.
They just have the kid and figure that things will somehow work out.
Then reality hits. The kid gets sick, misbehaves or worse yet, gets
crippled for life. Yet despite their incompetence the vast majority
of parents don't kill off the kid out of convenience. Even the most
detached parent eventually summons the strength to nurture and cure;
abandonment rarely enters his mind.

Not so with General Motors. It seems content to blame its children
for their own fate, sending them into the forest to fend for
themselves. GM's plan, having learned nothing, is to have another
kid and hope that things go better this time out. The trouble is
that, like human parents, it's far more likely that GM will just make
the same mistakes all over again.

If you think that GM's brand incompetence is an isolated case, think
again. K-Mart's takeover of Sears is another case of brand murder.
Anyone who believes that K-Mart acquired Sears' for anything other
than Sears' catalog of under-valued real estate is in serious denial.
For that matter, anyone who hasn't noticed the disappearance of
Woolworth's from the planet or Kodak's banishment from the Dow 30
Industrials has simply been asleep at the wheel. Michael Eisner's
running Disney on to the rocks is one more example.

The plain truth is that America's brands are devouring their young.
Sub-brands and line extensions are being spun off or closed down for
all the wrong reasons. Procter & Gamble, the place where all good
brands go to die, is infamous for killing off brands that "don't
perform," which more often than not means they don't please
accountants whose own lives are measured by fiscal quarters.

I guess this wouldn't bother me so much if I knew that these brands
and sub-brands really were to blame for their own failure. But I
have a sneaking suspicion that it's the mama and papa brands -- the
boys in the corporate ivory tower -- who are really to blame.
Guiding their decisions by balance sheets instead of real brand and
marketing strategy, they completely undermine and undervalue the most
powerful asset their companies possess: their brand. They discount
the trust and values their fathers spent decades cultivating and
nurturing, because they know nothing of trust and value.

Perhaps the worst tragedy of all is that, due totally to corporate
incompetence, the destruction of major brands is taking a
considerable human toll. As Reuters' report continues: "An
elimination of any one of GM's brands would likely mean plant
closings and a shrinking of GM's hourly work force." Translation: a
lot more than 20 or 30 people on the line are going to lose their
livelihoods. We're talking about hundreds, maybe thousands. And
that doesn't even touch on the dealers who devoted their entire lives
to brands that were once as "solid as a dollar."

This is the story that American business media continues to miss.
The widespread ignorance of branding is a scourge on the economy
that's going to get a lot worse before it gets better. Today,
General Motors, tomorrow, Levi Strauss. You know, that company that
is trying to sell its Dockers brand -- but can't find any buyers.


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