The Origin of Being Cool

There are not many times when a person such as myself is given the opportunity to pick the brain of someone as established as Al or Laura Ries, authors of Positioning (Al co-wrote with Jack Trout), The 22 Immutable Laws of Branding, The Fall of Advertising and the Rise of PR, and most recently, The Origin of Brands. This afternoon, however, I got to chat with Laura about their newest release (which has already become a favorite of mine), and how their theories can aid in saving not only the big brands of today, but also the start-up brands of tomorrow.

First, a little bit about Al and Laura Ries. The father/daughter duo run the Atlanta-based consulting firm Ries & Ries which touts a resume of clients such as Southwest Airlines, Burger King, Frito Lay, Pappa Johns, IBM, and Intel, just to name a few.

For more information on them, check out this. And, since we’re all blog-happy these days, check out Laura’s blog here.

For now, let’s jump in to what Laura had to say…

BJ: In The Origin of Brands, you give a list of the 10 most valuable brands (the list is included below). Of these 10 brands, which 2 are in the most trouble and why?

Laura Ries: Nokia. They have gone away from what made their brand so strong, cell phones. Now they have the N-Gage (the video game, MP3 playing, cell phone, all-in-one product) and other similar products. By doing this, they have missed out on many strong cell phone developments.

McDonald’s. They have been extending their menu for quite sometime now and with very little success. McDonald’s was made famous by making hamburgers. However, they now have over fifty items on their menu.

(Note: In The Origin of Brands, Al and Laura point out that the average McDonald’s unit in the US does $1.5 million in sales and the average In-N-Out Burger – which maintains a burgers-and-fries menu – does $1.9 million.)

The world’s ten most valuable brands and their estimated values, as determined by Interbrand, the leading brand valuation company (this list is given in greater detail in The Origin of Brands)

1. Coca-Cola ($70 billion)
2. Microsoft ($65 billion)
3. IBM ($52 billion)
4. General Electric ($42 billion)
5. Intel ($31 billion)
6. Nokia ($29 billion)
7. Disney ($28 billion)
8. McDonald’s ($25 billion)
9. Marlboro ($22 billion)
10. Mercedes-Benz ($21 billion)

BJ: In your opinion, what is the most overlooked skill that many entrepreneurs skip over when building a company?

Laura Ries: Trying to do too much. Many entrepreneurs have a lot of great ideas. That’s the problem. They should decide which one is the best one and focus all their efforts on that idea.

Also, all entrepreneurs need to spend a lot of their time and efforts on PR. They should work on their communication skills and their skills in dealing with the media. They need to become comfortable in dealing with the media. Every business needs a 3rd party endorsement whether that’s word of mouth, media coverage (i.e., PR), or advertising. However, advertising isn’t as credible as the others.

(Note: Al and Laura wrote an amazing book, which I mentioned above and have on my book lists called The Fall of Advertising and the Rise of PR. This book is a great tool for any entrepreneur.)

BJ: In The Origin of Brands, you discuss the differences between convergence (where industries merge) and divergence (industries branch off to create new categories and becoming the first in the new category). If a company already exists and then learns about the theory of divergence, what should they then do now, since they do not have the luxury of becoming the first in a new category?

Laura Ries: Aim at becoming a strong #2. Many companies have done this with some great success. Pepsi vs. Coke, Target vs. Walmart, Lowes vs. Home Depot.

However, you can’t be a carbon copy of the industry leader. You have to be opposite of the leader and attack the difference (Pepsi aimed at being the choice of a new generation, suggesting that Coke is for old people; Target aimed at becoming cheap chic, etc.).

Or you can simply tweak the category. The point of divergence doesn’t have to be a revolutionary difference. It could be something like locations or operations based.

BJ: OK, Laura, what if an entrepreneur comes up with a great idea to become the first in a new category and then learns the idea is already in action elsewhere?

Laura Ries: Being first doesn’t always mean actually being the first to do something. It’s more important to become the first in the mind of the consumer for that category. So even though some other company is doing what you want to do, they may not yet hold the position in the mind of the consumer for that specific category.

(Another Note: Al wrote the cult classic book called Positioning, which he co-wrote with Jack Trout in 1980. This book was based on a psychological positioning that each product has in the mind of the consumer. The best way to hold a psychological position is to be the first in the category and, therefore, the first in the mind of the consumer. I highly recommend this book!)

BJ: OK, Laura, last but not least, give me your top 3 books you would recommend to anyone who’s starting up a company, excluding your own books.

Laura Ries:

Purple Cow: Transform Your Business by Being Remarkable, by Seth Godin

The Anatomy of Buzz: How to Create Word-Of-Mouth Marketing, by Emanuel Rosen

The Tipping Point: How Little Things Can Make a Big Difference, by Malcolm Gladwell