These are the kinds of problems we all should have. In 1972, Bushnell’s Pong became the first commercially viable video game, and it churned out money. Yet it followed a string of failures. Bushnell himself had created perhaps the first video arcade game, Computer Space; it was so complex that its instruction manual ran to several pages. That flopped.

Magnavox had launched a Pong system for home use at the same time that Atari targeted arcades, but it was sold only through Magnavox dealers, who were most interested in selling televisions. That failed as well. Atari’s Pong overcame earlier entrants’ shortcomings. It was simple. The arcade setting allowed for new users to easily observe others’ play and to try the system out for just a few cents. Arcades were motivated to get people to try the game. By overcoming barriers to trial and adoption, it created a runaway success.

Atari’s win in the arcade seeded the market for a home system. The company’s home version of Pong sold 150,000 units, but Bushnell had his sights on building a system that could play a range of games through inserting cartridges into a machine. He could not raise funds adequate to that task, so in 1976 he sold the company to Warner Communications for the seemingly princely sum of $28 million.

Atari Creates An Industry, Then Vanishes

Six years later, Atari’s revenues were over $2 billion. It had become the fastest-growing company in U.S. history. Atari introduced video games to millions of consumers, and its 2600 system console defined the category, with over 15 million units being sold. Atari had a market share of 75 percent and seemed utterly dominant.

Then it collapsed. Atari’s revenue halved in just one year. The company was sold off in 1984 and, despite a few comeback attempts, never recovered.

Why?

As often happens in promising new markets, a host of competitors entered. Mattel, Coleco, and others launched sophisticated systems, whereas Warner held off investing in a follow-on platform. Personal computers attacked from a completely different angle, being able to run simple word-processing and other programs as well as games; one PC manufacturer advertised its product as “a real computer for the price of a toy.”

Another problem was the company’s strategy toward games. Atari made most of its money from selling game cartridges, not the console, but it did not control the supply of games. The company could not hold onto its most talented programmers—a cadre that included two youngsters named Steve Jobs and Steve Wozniak, who figured they might do better by co-founding Apple Computer. Other programmers created rival games publishers such as Activision. Many more competitors emerged from nowhere, often with low-quality games that degraded the overall experience.

Of course, the industry later rejuvenated. Nintendo launched a highly successful, more complex system, only to encounter tough competition from Sega, Sony, and Microsoft. These companies built progressively more advanced and expensive systems catering mainly to hard-core gamers, until Nintendo reinvented the category again with its groundbreaking Wii, a console so straightforward that it is found at many senior centers.

There Are Several Take-Aways From Atari’s Story:

Atari did not need to be the first home videogame system, and in fact, it was not. But it was critical for a startup like Atari to be early. Well-funded companies such as Sony and Microsoft could take more time, although eventually there was room left only for competitors to attack from a completely different direction (Zynga is one such firm, building an estimated market value of over $5 billion just three years after its founding in 2007 by amassing huge numbers of players through Facebook and other browser-based environments).

• In environments of rapid flux in technology and customer preferences, there may be many competitors entering, each with slightly different assumptions about what formula will win. Early winners such as Atari can do very well through reaping quick profits or selling themselves to bigger companies. Some early movers may become long-term winners. Even runners-up can succeed if they watch their expenses; Mattel and Coleco each sold more than 2 million video game consoles before withdrawing from the market.
• When a company leads a burgeoning market, by all means it should fight to stay there. Warner Communications looked at the large investment needed to create newer systems and thought it could squeeze further profits from the Atari 2600 before plunging forward. Meanwhile, Mattel and Coleco brought out competitive products that performed better and eroded Atari’s status as the clear leader. By the time Atari launched its successor systems, the competitive landscape had changed fundamentally.

• An industry’s business model profoundly affects the fate of early versus late movers. Atari had a razors-and-blades business model that sold the console at a small profit and aimed to make more money on the cartridges containing its games. Unfortunately, it ended up making worse games than its competitors. If Atari could have limited games to only select titles, as later games systems have done, it could have ensured a better-quality experience and made greater profits. The imperative would have been to clobber its target market segment with terrific games that made it unattractive for consumers to switch systems. Alternatively, Atari could have focused on creating ever-improving premium priced consoles with backward compatibility to play older games, thereby making its system the de facto industry standard. It did neither.

Timing The Market

Companies that have a basic thesis about the advantages and disadvantages of their market timing should be able to avoid many of Atari’s missteps. The thesis is straightforward—it is better to be early when a company can.

• Preserve an early market lead stemming from barriers that later entrants will face.

• Build resources and competencies that larger firms eventually could imitate but which they will prefer to acquire.

• Avoid becoming locked in to inappropriate technologies or business models before the market is deeply understood.

• Avoid incurring large upfront costs because it is early to market.

If a company cannot meet at least two or three of these conditions, then it may be better off as a fast follower that learns from others’ mistakes.

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In the broadest sense, brands constitute the organizing mechanism to help us navigate through each day. What we drink, eat, or drive, what products we use at home and at work, where we play or vacation, where we live, what we watch, what we read, and even who we interact with, and how, are arguably “brand” choices. That is, they are a function of the set of associations and perceptions about companies, products, services, or even TV shows, people and places that have formed in our minds.

Think about it. You have formed an impression, sometimes a strong one, sometimes not, about virtually all of the above. That perception is based on whatever mix of inputs have been available to you, whether intended or not: previous interaction, something you read, heard or observed, and yes, formal marketing communications such as advertising.

We develop our perceptions of a brand based on this full range of direct and indirect stimuli. Yet many businesses—even large, global, sophisticated ones often seem satisfied to “control” only a narrow portion of these stimuli—typically the traditional marketing tools like advertising, promotion, packaging, etc. It is not surprising to hear boardroom conversation and cocktail chatter about the latest retail promotion or the CEO’s favorite TV spot. But it is far less common to hear discussion of how a consumer’s interaction with a company salesperson who happens to be in the store when the consumer is there, has been engineered to ensure that that interaction reinforces the meaning of the brand for that consumer.

Despite the ubiquity of branding and the overwhelming number of companies and executives who engage in brand marketing, relatively few fully utilize their brand as an asset to be leveraged. For a select few, brands have become a foundational element of their overall business strategy, creating financial value at every turn and directly influencing revenue and profits.

This select few know that the true value of their brand lies below the surface. It’s not just about clever ads or billboards, although advertising is certainly a component of their brand. It’s not just about packaging, the website and social media, although these are certainly important in their own right. Instead, a great brand is a set of consistent, positive associations and perceptions that have been created through the sum total of their interactions with that company, product, or service.

Simply put, customer experience is at the core of every brand. Research shows time and again that people will reward companies whose products and services meet or exceed their expectations. The reward comes back in the form of brand preference and customer loyalty that translates into revenue. Yet many companies do not seem to recognize how fundamental it is for all customer interactions to be seamlessly and effortlessly aligned toward a mutually desired set of experiences.

Companies that understand the true meaning of a brand will use their brand to influence and drive their entire organization toward highly satisfying and mutually rewarding company/customer interactions. It’s how Southwest Airlines came out of nowhere to become one of the most respected carriers, and how Coca-Cola has been able to deliver a consistently refreshing experience for millions of consumers throughout the world for more than 100 years.

Behind every great brand is a history of effort and commitment. It’s not easy to deliver a consistent brand experience. It takes strong leadership and a clear brand vision combined with employees who share the vision and who work every day to make it a reality for every customer. It also takes constant monitoring to make sure that things stay on track. It’s hard work because it means we have to ingrain our brand aspirations into our business at every level, not just in our marketing communications.

If your goal is to create innovative, compelling, and actionable brand strategies that can be effectively delivered in the marketplace then you’ll need to develop brand planning processes and tools that enable your company to identify and adopt behaviors that will lead to enhanced customer experiences and revenue growth.

Most companies begin by asking four simple brand development questions:

1. What is the state of our brand today?
2. What is the desired state for the brand tomorrow?
3. What must be done to activate the brand throughout the company?
4. What ongoing measures are needed to ensure that the brand promise is being fulfilled on a consistent basis?

These core ideas and others can be found in Soulful Branding – Unlock The Hidden Energy in Your Company & Brand, Jerome Conlon, Moses Ma & Langdon Morris.

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What I refer to here as ‘brand’ are not the spacial elements, such as the logo, website, product, etc., but the less tangible, such as the values, purpose, behaviors and experiences. In defining it as such, we can consider brands temporally rather than spatially.

A brand is not created exclusively by any one specific group of people – it is born (e.g. when a business/product is launched), it grows and develops (e.g. throughout the business/product lifespan), and it dies (e.g. when the business/product ends and people eventually forget about it). During its lifespan a brand will mean a myriad of things to any number of people.

In our networked, digital economy the content and value of brands are increasingly being created, or more accurately co-created, by all stakeholders (company, staff, users, etc). Digital technology has encouraged conversations between a company and its users and, importantly, between users themselves and has contributed to an emerging democratization. A good example is GoPro camera user videos as a prominent source of developing the GoPro brand and promoting the product. Brands are not only economic but are also social and cultural, and so are always open to development from stakeholders. Societal, cultural and economic environments are also constantly changing and developing, and therefore so too should brands.

Brands Are Fluid

If a brand is considered temporally, and is perpetually developing from the informed input of all stakeholders, what does this mean for businesses and the branding industry? A brand is not a static entity that you can create and then lock away in a brand guidelines document or a marketing plan. With a brand in perpetual development it is important to constantly realize where your brand is, and vitally how you might affect it.

Throughout its lifespan a brand will inevitably have numerous visual guises, be that changing logos, identity systems etc. as well as varying tactics with which to appeal to people. However, what these elements do is reflect and affect where a brand is at any point in time, helping to develop the brand in and for its current social, cultural and economic environment. Much like a business constantly develops its offering and working methods, so too in order to remain relevant (or popular) the brand must be in perpetual development and evolution while still communicating itself at key points in time.

All Remains Unfinished

Psychologist Dan Gilbert has explained a phenomenon he calls the “End of history illusion,” where people imagine that the person they are now is the person they will be for the rest of time. He says, “Human beings are works in progress that mistakenly think they’re finished.”

I suggest that the same is true for brands – brands are works in progress that we mistakenly think are finished. What branding industry professionals do is share the brand with the world, contextualize the brand, promote the brand, represent the brand – essentially help to shape and direct the brand in and for its current social, cultural and economic environment. What they or businesses don’t do is either fully control or own the brand.

Brands should never be considered finished. They aren’t static, but are temporal and evolutionary. They can be better understood if considered in a state of perpetual development. When considering brands we should accept the simple realities of wabi-sabi; nothing lasts, nothing is finished and nothing is perfect.

Contributed to Branding Strategy Insider By: Paul Bailey

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What would happen I wonder if, like Richard Branson does so often, you reversed the order; if the question being asked was “What would we need to co-ordinate (how, when and where) in order for customers to feel this way?” Start with your terms of brand in other words – and use those to define your terms of business. It sounds radical. But really it stems from the questions that everyone asks now, just in reverse order.

Ask first what most ask second:

• Who do you want to be your customers?
• How will you change the industry for them?
• How will you behave to make that happen?
• How will you help them feel that they will love?
• What will they see by way of proof that you are committed to this?

Then, based on the answers above:

• What will you offer them in terms of products/services (that they don’t get now)?
• Where will you be for them? (on the ground, in the cloud, online, domestic, international)
• Who will you work with to make that happen?
• How will you look after them that they’ll enjoy?
• How, where and when will you grow in order to be that company?
• What will you return by way of fair compensation for your efforts?
• What and how will you charge for what you offer that makes that happen and feels fair?

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So how should we frame brand ideas to encourage acceptance? Inspired by another New Yorker article on why innovations do or do not spread, here’s nine suggestions I hope you find useful in getting others to embrace and act on your thinking:

1. Provide a compelling motive to accept a new idea by making the problem it answers urgent and real. Present the problem in ways that people can actually see or experience rather than imagine or process. Give them a reason for change.

2. Connect the answer (idea) with the problem. Seeing really is believing. Show people what happens for the better, not just how the idea works.

3. Work with people’s inclinations not against them. Understand why they believe and behave the way they do. Leverage as much of that as you can by giving people enough of what they recognize for them to speculate on the remainder.

4. Make acceptance easy. Solve their problem, not yours. Create a new and better normality that people can start to live with.

5. Prep the dip. “The dip” is Seth Godin’s term for the hard yards that precede success. If your idea is going to hit bricks before it reaches bouquets, tell people what to expect, and why.

6. Identify and quantify the rewards. Make sure the emotion of what the new idea will deliver is greater than the emotion people derive from the way things are now. Make the answer warrant the effort of acceptance.

7. People, not technology, training or even logic, encourage the diffusion of ideas. People follow the lead of others. As the New Yorker observes, “effort is a social process”. Therefore if you want an idea to spread, form conversations around it. Give people things to talk about with others who like and trust them.

8. Find common ground first between you as the idea creator and your audience as the idea recipients. People accept ideas more readily from people they like; people they come to believe are a lot like them.

9. Give people ways not just to welcome the idea but then to work with you to help develop it. That way it becomes their idea as well. Now make their championing of the idea a way for them to enhance their social or communal standing or, at the very least, make sure that doing so doesn’t risk them looking or feeling foolish.

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