Miley as a brand

Continuing today’s kick on reputation, there is this story last week from Forbes – Who’s Minding Miley?:

Miley Cyrus, the 15-year-old star of Disney’s Hannah Montana juggernaut, is the latest tween sensation to threaten her innocent reputation–and give her parent company a headache–after posing for racy photos that appeared online this weekend.
But the photos- including one of Cyrus topless, clutching a blanket over her chest- weren’t taken by an amateur with an axe to grind. Instead, they were part of an Annie Liebowitz spread that will run in an upcoming issue of Vanity Fair. Cyrus apologized to her fans and told People magazine that she “never intended for any of this to happen.”
Intentional or not, fans–and Disney–better get used to it. Like the Olsen twins and other stars before her, Cyrus is clearly growing up. But her risqué transition from tween to teen risks alienating her core fan base, and their purse-holding parents.

Point well taken: brands change — especially if they are teenagers who grow up. The story contrasts so far success of Daniel Radcliffe (Harry Potter) and the failure of Lindsay Lohan and Britney Spears. But that just raises the question of what is the brand. Radcliffe wasn’t the brand – Potter was. So Radcliffe can move on to other roles (not as easy as it always sounds — Leonard Nimoy never did shed Mr. Spock, while William Shatner finally made the transition with Boston Legal). Lohan and Spears themselves were the brand.
And customers for the brand also change — and get older. Maintaining customer loyalty can be hard as customers move in and out of your target demographic. GM succeeded for a number of years by having a line of products that pulled people to the higher level as their economic situation improved. That finally fell apart – but it was a great example of a form of brand transitioning.
Bottom line: brands are not static. And the management and valuation of brands needs to take that into account.

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Protecting reputation

Some companies seem to be moving more quickly now days to protect they their reputations. Take, for example, the response to the bisphenol A (BPA) controversy as noted in this weekend’s Washington Post – Speeding Up Safety:

After a government panel said there was “some concern” that the chemical bisphenol A could be harmful to infants and small children, it took less than a week for Wal-Mart and Toys R Us to announce that they would stop selling baby bottles that were made with it.
The swift response stood in stark contrast to the drawn-out reaction to concerns about another chemical, polyvinyl chloride, or PVC, that go back to the 1970s. Ikea came up with a plan to remove PVC from its products and packaging in the early 1990s. Sears Holdings, the parent company of Sears and Kmart, pledged to do so just last December.
The actions of Wal-Mart and Toys R Us were also notable for what the companies didn’t do: wait for lawmakers or federal regulators to step in or for scientific consensus about bisphenol A’s negative health effects. In fact, they chose to disregard the Food and Drug Administration’s position that food containers made with BPA were safe.

Maybe it helps that both Wal-Mart and Toys-R-Us have gone through the PR wars before. In this case, they want to be ahead of the curve.
In any event, this case illustrates the value of reputation and brand. Brand is not an asset that hangs out there by itself. The brand is only as good as the products/services/actions that back it up. Increasing your reputation for safety is one way to improve your brand — especially if your primary market are parents of small children (ala Toys-R-Us).

Reputation management

The previous posting illustrated one way of protecting a company’s reputation: a proactive approach to getting ahead of problems. There are other tools as well. One is better communications — as a number of companies have found out. Telling the world about your corporate values and what you do turns out to make good financial sense (see earlier posting.)
Then there is the PR approach. This way relies on what has become to be call “reputation management.” Companies can hire services that monitor the Internet and other media for complaints and comments (see earlier posting). But, as Business Week (Do Reputation Management Services Work?) points out:

It’s still hard to say how companies are using reputation management services, but industry players say clients fall into two camps. Some want to understand and respond to customer complaints; others often just want negative posts to go away. “The majority of inquiries that I get are from people who are looking to do a cover-up,” says Andy Beal, a marketing consultant and co-author of Radically Transparent: Monitoring and Managing Reputations Online. “They’re not necessarily interested in trying to fix the problem. They just want to make sure that other people can’t find it.”

Again, same point as before. For a brand to have value, it has to be backed by something that customers want. Trying to simply hide the bad stuff may work for awhile. But eventually you have to produce the good stuff if you are to survive.

The Cognitive Age

New York Times columnist David Brooks has discovered “The Cognitive Age“. First he dismisses the “globalization paradigm”:

Globalization is real and important. It’s just not the central force driving economic change. Some Americans have seen their jobs shipped overseas, but global competition has accounted for a small share of job creation and destruction over the past few decades.

Then he lays out the case for a different view:

The central process driving this [economic shift] is not globalization. It’s the skills revolution. We’re moving into a more demanding cognitive age. In order to thrive, people are compelled to become better at absorbing, processing and combining information. This is happening in localized and globalized sectors, and it would be happening even if you tore up every free trade deal ever inked.
The globalization paradigm emphasizes the fact that information can now travel 15,000 miles in an instant. But the most important part of information’s journey is the last few inches — the space between a person’s eyes or ears and the various regions of the brain. Does the individual have the capacity to understand the information? Does he or she have the training to exploit it? Are there cultural assumptions that distort the way it is perceived?
The globalization paradigm leads people to see economic development as a form of foreign policy, as a grand competition between nations and civilizations. These abstractions, called “the Chinese” or “the Indians,” are doing this or that. But the cognitive age paradigm emphasizes psychology, culture and pedagogy — the specific processes that foster learning. It emphasizes that different societies are being stressed in similar ways by increased demands on human capital. If you understand that you are living at the beginning of a cognitive age, you’re focusing on the real source of prosperity and understand that your anxiety is not being caused by a foreigner.
It’s not that globalization and the skills revolution are contradictory processes. But which paradigm you embrace determines which facts and remedies you emphasize.
Politicians, especially Democratic ones, have fallen in love with the globalization paradigm. It’s time to move beyond it.

Brooks is absolutely correct that the skills revolution (and technology) play a big role in the changing economic structure and the shift to the I-Cubed Economy. He is dead wrong, however, in positing this as “trade versus technology”. Globalization and the skills revolution are the woof and weave of the tectonic shift occurring in our economy. To leave one out is an incomplete analysis. Brooks chides the Democrats for their one side view (not mentioning that the Republicans have a mirror-image view – “globalization is good”). Ironically, his analysis falls into the same trap on the other side. By ignoring and dismissing globalization as part of the situation, he misses an opportunity to look at how the two interact and impact one another.
The Democrats need to tell the entire story. But so does Mr. Brooks.

Internet tax case

Just a heads up on a new case on the old Internet sales tax issue:
Amazon Sues Over State Law on Collection of Sales Tax – New York Times:

On Friday, Amazon filed a complaint in State Supreme Court in Manhattan objecting to the law, which was approved as part of the $122 billion state budget that Gov. David A. Paterson signed last week. The law is expected to raise about $50 million.
The issue is not whether people should pay tax when they buy goods from out-of-state sellers like Amazon. For decades, the state has required them to pay sales or use tax.
The question is whether the vendors must collect that tax on behalf of the state. Generally, only those companies that have a physical presence — like an office or store — in the state where the purchase is made are required to collect the tax.
The new law is based on a novel definition of what constitutes a presence in the state: It includes any Web site based in the state that earns a referral fee for sending customers to an online retailer. Amazon has hundreds of thousands of affiliates — from big publishers to tiny blogs — that feature links to its products. The state law says that thousands of those have given an address in New York State, although the addresses have not been verified.
The law says that if even one of those affiliates is in New York State, Amazon must collect sales tax on everything sold in the state, even if it is not sold through the affiliate. This is an extension of an existing rule that companies employing independent agents or representatives to solicit business must collect taxes for the state.
Amazon’s suit challenges the constitutionality of this interpretation and seeks a declaratory judgment that it is invalid.

Good job numbers … maybe

Compared to last month, today’s employment numbers are good news. BLS announced that nonfarm payroll employment where “little changed” with a decline of only 20,000 and that the unemployment rate actually declined to 5.0% in April. As the New York Times (U.S. Sheds Fewer Jobs Than Expected) reports:

Economists had been bracing for a decline of up to 85,000 jobs, in line with the rate of losses over the first three months of the year. Instead, the Labor Department reported that the services sector recorded a surge of new jobs in April.

The Wall Street Journal summarizes the treads trends as follows:

According to Friday’s report, hiring last month in goods-producing industries fell 110,000. Within this group, manufacturing firms cut 46,000 jobs. The sector has lost jobs every month for almost two years.
Construction employment was down by 61,000, the 10th-straight drop and largest since February 2007. Residential building bore the brunt of the decline, but nonresidential construction jobs fell as well, suggesting that the housing slump is broadening.
Service-sector employment rose 90,000 in April after growing just 8,000 in total during the first quarter. Business and professional services companies added 39,000 jobs, reversing March’s sharp drop, and the financial sector added jobs for the first time in nine months. Retail trade lost 26,800 payrolls.
Temporary employment, which economists consider a leading indicator for future job trends, fell by over 9,000.
Continuing a recent trend, job gains were concentrated in personal services, which tend to be more labor intensive than manufacturing and other services. Education and health services employment rose 52,000. Leisure and hospitality businesses created 18,000 new jobs. The government added 9,000 jobs.

However, the involuntary underemployed (part-time for economic reasons) increased by 300,000. This is a change from last month when the involuntary underemployed problem didn’t increase as much as the general unemployment problem. There are now over 800,000 more workers who are involuntarily underemployed than there were a year ago.
This is our silent employment problem (see earlier posting).

ISO patent valuation standards

In an earlier posting I mentioned that the International Standards Organization (ISO) was looking into the possibility of starting a project on patent valuation standards. The latest word is, however, that key countries are opposing this project. According to our friends over at IP finance … where money issues meet intellectual property rights:

Voting ends tomorrow (2nd May) at ISO on whether to create a new project committee for Patent Valuation. In the initial round of comments to the ISO Technical Management Board 25 replies were received. 16 member bodies voted in favour of the starting work on the proposal whilst 8 rejected the idea. One abstained.
Countries rejecting the standard included Japan, Canada, Finland, Netherlands, Spain, South Africa, the UK and the US.
The Netherlands provided the most detailed arguments on their position, essentially maintaining that the idea of a standard was not feasible and that it is difficult to understand how the complexities of the subject matter can be mastered sufficiently to develop any useful standard.
The UK commented that the work on the standard on brand valuation should be completed before starting work on patent valuation.
ANSI in the US considered that a standards development committee was not an appropriate forum for doing the kind of the work needed to develop and evaluate new patent valuation methodologies.

As I said earlier, If an agreed upon standard for valuing intangibles can be found, it will be a major step forward toward regularizing their role in the financial system. But, I share the concerns. It is not clear that the ISO is the right organization for setting financial standards. Nor is it clear that the appropriate stakeholders are involved in the process. Before this goes further, I think a lot more groundwork needs to be done.