Building a Bridge to The Future: Why Ford Can Go Further

Recently, Ford's CEO Mark Fields came under fire from its board of directors for its lackluster quarterly financial performance. As it strives to remain competitive in the face of the most significant change the automotive industry has seen in over 100 years, Ford has invested heavily in future technology. Ford's board was reacting to the challenge that all automotive companies are facing...how to fuel what will someday be your core business with profits from what will someday be your legacy business, while making everyone happy today.

How does a brand keep one foot in the past and one foot in the future and thrive today? Brands that focus on delivering consistent brand experiences that transcend categories and time can use those experiences to build a bridge to the future. For these brands, the classic '4P's' of marketing become subordinate to delivering one big 'E'. Over the years, Apple has been a master at this. 

Brand as big 'E'

In contrast, in the automotive business, all efforts are focused on delivering one big 'P'. Product development gets the lion's share of investment. All the other P's work in service of that product. This is why automotive marketing rarely strays from touting features and benefits. Product is star--the ultimate object of desire, while everything else, including the customer becomes a supporting prop for the product.

This is perhaps part of the reason that automotive marketing, despite a significant shift to digital media, remains stuck in the past. This is perhaps part of the reason that the category is losing relevance. And perhaps part of the reason that automakers are seeing their profits eroded by the need to prop up volume with ever increasing incentives.

And while that's the short term problem, nearly every automaker has acknowledged that their business will be shifting to a mobility services model over the next decade or two. Thus at some point, automotive brands will need to change the category conversation from 'P' to 'E' if they are to survive. 

Dictionary.com defines mobility as 'the movement of people in a population, as from place to place, from job to job, or from one social class or level to another'.

Thus, the  new automotive conversation will need to shift the focus from car as star to brand as life enhancing tool. The first brand to consistently and credibly do so has the opportunity to claim leadership and define the category on their terms.

And Ford just might have an edge to claim this leadership role.

First, it has established a Smart Mobility subsidiary to focus on delivering future experiences. Second, and perhaps more importantly, Ford has a history and heritage that allows it to credibly lay right to this claim. Henry Ford's vision was not about sheetmetal at all, but rather about affording the common person the opportunity for upward mobility. 

Ford's marketing has already dabbled in this territory. Ford's 2017 Superbowl introduced its Smart Mobility services by highlighting the consequence of the absence of mobility in a variety of non automotive life situations. And its tagline 'Go Further' has the potential to punctuate mobility as a life enhancing tool.

But in order for Ford to fully make the move in marketing they must build the bridge from the future to back to today. They must begin to highlight the almost forgotten power of personal mobility by focusing on the life enhancing experiences that all of their cars and trucks bring to customers right now. Ford has the right to become the champion for the millions of Americans who are feeling left behind. The Americans that Ford helps to go further, everyday. By making this shift, the customer becomes the star and the vehicle and other services become the tools to better life experiences...much like the Model T was oh so many years ago.
















 

The Autonomous Vehicle Adoption Curve: Why It's Likely to Look Unconventional

In a study conducted by Deloitte earlier this year, a vast majority of consumers felt that fully autonomous vehicles will not be safe.

Despite that statistic, vehicle manufacturers and technology companies are investing billions of dollars to develop fully autonomous capabilities. In fact, the first fully autonomous vehicles are due to hit the market before the end of this decade. But with such a high level of distrust, who will buy them? Perhaps the secret is to expand the reach of the category, rather than trying to convert those already in the category?

Unconventional Diffusion of Innovation?

Classic diffusion of innovation theory suggests that technology is adopted in stages, first by innovators, then early adopters, early majority and so on. 

This same theory suggests that innovators are risk takers, dreamers and adventurers. And early adopters are characterized as influencers who like to embrace change. But will that be the case for autonomous technology adoption? Or will the adoption curve look completely different?

Yesterday, I had a conversation with an automotive thought leader who suggested that the innovators would be commercial customers like Amazon and FedEx.  Hardly the classic risk taking dreamer or adventurer. Yet the argument made a lot of sense because for these companies, efficiency in time and money are key purchase motivators, and they carry things, not people.

If the innovators are commercial, what might the first consumers who make up the early adopters and early majority look like?

Can we change behavior?

Every licensed driver in the world has probably hit an imaginary brake pedal while riding as a passenger. The fact is, we don't just distrust autonomous, we distrust giving up control of the wheel, and of our consequent fate in potentially life threatening situations. 

Thus, finding the early adopters who are open to change may be more difficult when the new technology is not just a new smartphone, but rather a perceived safety threat to themselves and their families. 

Perhaps, rather than those who embrace change, might our early adopters actually be those who have nothing to change? Might they be those who have never driven a car before? Or those who have already abdicated control to others?

Sources of Early Adoption

If that is the case, then might early adopters be comprised of adults who have never driven before?  Perhaps in developing countries where vehicle ownership rates are low and automotive fatalities are high? It's not likely a coincidence that these are countries in which distrust of autonomous vehicles are lower. This won't be the first time that developing countries beat others to the punch. This is, in fact, quite similar to historical adoption of mobile technology, where countries with less access to landlines and home computers were the first to embrace mobile. 

Does that mean that countries like the US will fall into the late majority or laggard category? Not if US automakers look in unconventional places, with unconventional business models, to find autonomous customers. 

According to a recent study by the University of Michigan Transportation Research Institute, the rate of licensed drivers in the US is on the decline. This decline, while happening across the age spectrum is most pronounced at the younger end, and is significant. In 1983, almost half of all 16 year olds in the US had drivers licenses. By 2014, this rate had fallen to less than one quarter. During that same time, there was a 21% decrease in 19 year old licensed drivers, and some level of decline in every age category below 55. Much of the resistance, particularly at the younger end of the spectrum is due to the high perceived cost of vehicle ownership. 

So,  autonomous vehicles could provide US automakers with an opportunity to tap into the unconventional/incremental target of non-drivers. Of course, since early autonomous technology will not be cheap, US automakers will need to marry their nascent ride sharing initiatives with their autonomous vehicles from day one, if they are to penetrate this segment.

There are indeed other segments of non-drivers that could, for the first time, be accessible to automakers. Disabled and older former drivers would also fall into this category, again, expanding the total market for new vehicles. 

Brand Stretch?

Will appealing to these targets require automotive brands to stretch to the breaking point---beyond their current driving focused equities? If the focus of their marketing remains on features and dynamic benefits, then yes. If, instead, they  rediscover the higher order emotional benefits upon which their brands were first created, they might find remarkable synergies with their past. For instance, the freedom to explore new life experiences is what personal mobility brands have always offered. And at some time in the future, the laggards will even realize that this freedom to experience expands when they are no longer encumbered by the limitations of self driving.

What's the Purpose of Purpose? Don't Ask Oscar Munoz.

By now, unless you have been living under a rock you've heard of United Airline's series of debacles that wiped a billion dollars in shareholder value off the books. Much has been written about the PR nightmare that was exacerbated by the initial tone deaf response by United's CEO, Oscar Munoz about 're-accommodating' passengers. Digging deeper it seems that response is symptomatic of a brand culture in which words are meant to create an illusion for shareholders and customers, rather than shape actual behaviors. 

One need only go to 'Shared Purpose and Values' on United's website to discover the disconnect between United's words and behaviors. Its purpose is stated as: 'Connecting People, Uniting the World', something that arguably any airline does. The statement of purpose is accompanied by a video in which United's beleaguered CEO and other United employees espouse the values of 'The New Spirit of United'. 

The video speaks of a 'family friendly community' that 'faces challenges head on' by (in an unfortunate choice of words) 'tackling' them. It espouses 'putting the customer first' by being 'warm and friendly', and 'treating others the way they want to be treated'...

But as hundreds of millions of viewers around the world saw with their own eyes, these words ring hollow in the face of reality. And while this incident may have been more heinous than other customer experiences, the fact is that United consistently ranks at the very bottom of airline satisfaction surveys.

United is not the only brand to confuse grand proclamations with real action. Stating your brand 'purpose' has been in vogue for a few years, as the next big driver of brand value. This has triggered a rush by companies and brands to 'discover' and articulate their purpose.

What's the Purpose of Purpose?

Which begs the question, 'what is the purpose of a brand purpose?'

It might be easier to begin with what it is not:

• It is not something to fill a void in the 'about us' section of a website in the hope that investors and potential customers will be impressed with your new social conscience.
• Neither is it a way to re-articulate or re-package your existing CSR initiatives to make them appear central to your business.
• Finally, it is not simply a description of the business that you are in, disguised in a broader societal context.

Rather: 

• It should live, not on the corporate website, but in the behaviors of every employee in the company. 
• It should go beyond CSR to inform every major decision that a company makes.
• It should reflect a unique and sincere commitment to improve upon something concrete that has heretofore been lacking...thus making a tangible improvement on category experience and societal impact. 

An Airline With A Purpose

And while true purpose is scarce in the airline industry,  JetBlue might be an exception. It was launched in 1999 with the commitment to 'bring humanity back to air travel'. In 2007, JetBlue let passengers sit on the tarmac for 10 hours in a snowstorm and faced a PR crisis as big as United's current nightmare. Instead of just issuing a press release, it drew upon its purpose to deliver a detailed, fully transparent 'Customer Bill of Rights' that includes predetermined monetary compensation for customers who are subject to an avoidable inconvenience. And it did so within one week of the incident.

This dedication to behaving its purpose is probably the reason why today, according to newly released ratings by Trip Advisor, JetBlue is ranked number 1 in the US and number 4 in the world.  

Source: Trip Advisor 2017 rankings

True Purpose Creates Value

Moving outside the airline category here are a couple more examples of how real purpose creates real value:

• In technology, Samsung makes the rather nebulous pledge to 'inspire the world, create the future'. In contrast, the original purpose of Apple, the most valuable brand in the world, was to 'remove the barriers of learning how to use a computer'. While that purpose may not seem as clear since Steve Jobs died, it is reflected in every successful product that Apple has ever created.
• In a category near and dear to my heart, most automotive companies are currently stating their 'purpose' in terms of 'mobility', which is essentially a generic description of the category. In contrast, Tesla's purpose is to 'accelerate the development of sustainable transport'. This purpose at once sets it apart from other automotive companies, provides a roadmap for product and service development, and articulates a greater societal impact  It may also help to explain how Tesla's market cap could surpass Ford's last week.

So the purpose of purpose is not to just answer the question of what you do, or even why you do it. The real purpose of purpose is to identify what the category and society would miss if you'd never existed.

Sadly, for United, the answer might be 'nothing'.

The Future of Automotive Brands: Learning From the Airlines

Once again, automotive brands played a prominent role at CES. As cars continue to evolve to become the ultimate mobile devices, two factors, autonomy and sharing, will likely drive significant changes in car usage. According to Deloitte, by 2030, approximately 40% of miles driven in the US will be in either shared or autonomous vehicles. By 2040, shared miles will account for 80% of all miles driven, with more than 50% of those miles traveled in autonomous vehicles.

In a future where there are no drivers and no owners, what will happen to car brands? Will anyone care about styling or performance--the key automotive differentiators today? Will they even care who built the car that they use? If customers use cars as they are available, and car sharing services take care of the maintenance, will end users have any relationship at all with car manufacturers?

In fact, in search of efficiencies, car manufacturers are already diluting the role hardware in brand building. In recent years, companies like Nissan, Mercedes, FCA, Mazda and others have engaged in extensive platform and powertrain sharing agreements between unrelated manufacturers. Thus, the Mercedes truck that you buy, may be manufactured by Dodge or Nissan on a Dodge or Nissan platform. 

Could this actually be the first step in an entirely new model? One in which there are at best a handful of automotive manufacturers who supply cars to mobility service providers? Think Boeing and Airbus. In such a world, it is unlikely that there will be much differentiation at all on the outside of the vehicle. Instead, like airline brands, all automotive brand differentiation will be derived from in-car experiences.

What can automotive brands learn from airline brands to ensure that they are able to build shareholder value in the future?

The first, and perhaps most important learning is to strive for differentiated experiences, rather than differentiated prices. Airline focus on price and cost cutting has provided a valuable lesson in how quickly pricing to supply, without building demand, can lead to sub-par customer experiences and shrinking profits.

Putting that aside, there are many ways that automotive companies can differentiate by leveraging their own brand DNA to emulate some of the world's best airlines:

Amenities

Emirates is known for it's first class suites that offer the over the top luxury and amenities of any airline. Rolls Royce, Bentley or even Mercedes could leverage their heritage to create the most luxurious cabins, chock full of in-transit comfort and amenities. Grey Poupon, anyone?

Personality

On the other end of the spectrum, Southwest offers the basics with a cheeky attitude. This is clearly territory for Kia to dominate. Imagine riding along, singing karaoke with the Hamsters.

Quality of Experience

Singapore offers some of the best service in the air. Lexus and Toyota could leverage their quality/service reputations to emulate Singapore's business and economy class service.

National Pride

Qantas offers the spirit of Australia, with cuisine prepared by local chefs, and a decidedly Aussie in-cabin personality. This is a great territory for a brand like Chevrolet to own. Baseball, hot dogs, and apple pie, anyone?

Entertainment Content 

Jet Blue pioneered in flight access to Direct TV. Could a car company be known for the ultimate in flight entertainment? Could Hyundai, with its high profile sponsorships take this territory to create a sports bar on wheels?

Class of Service

Some airlines offer all business class service. Tapping into its Town Car heritage, Lincoln could offer mobile offices to business executives. Moreover, Uber, who will likely play in this space in the future, has already set the stage for classes of experiences, with its X, XL, Select and Black service. Its autonomous fleet could offer extensive in-car experiences commensurate with each of these classifications.

So, for those auto brands who see the future, moving from sheet metal and speed need not be the end of the world. But it will take a definite shift in orientation, and a deep understanding of their brand heritage and how that heritage can help them uniquely fulfill in-car customer needs.

U.S. News Media: Reporters of Information or Creators of Branded Content?

In 1961 Robert Minow, then chairman of the FCC  famously called television a ‘vast wasteland’ and admonished network executives that ‘your obligations are not satisfied if you look only to popularity as the test of what to broadcast. You are not only in show business…It is not enough to cater to the nation’s whims---you must also serve the nation’s needs’.

Robert Minow: TV 'Vast Wasteland'

And the networks responded. From the 1960’s to 1980, Networks came to regard the quality of their news coverage as a source of prestige, not a source of profits. As such, network news was a perpetual ‘loss leader’ but news programming was revered.  

Networks were quick to forgo commercial programming to cover breaking news events. From JFK’s assassination to the moon landing, to the Watergate hearings, events were covered with little commentary and no commercial incentive as they unfolded. Thus the narrative was the same across networks. The difference was whether you chose to hear about these events from Walter Cronkite or David Brinkley, and how you chose to react to them.

Information or Content?

But that is no longer the case. As big changes have occurred in media companies, technology, and audiences, news sources seem to be behaving more like creators of branded content, than reporters of information. 


What's the difference? Information is defined as ‘facts provided or learned by something or someone’. Branded content, on the other hand, is defined as ‘a form of advertising that uses the generating of content as a way to promote the particular brand which funds the content’s production.’ 1

Facts or Brand Myths?

In promoting themselves, brands selectively communicate facts that support their story.  Great brands often augment those facts by creating myths that build perceived brand value. Was Apple, the world’s most valuable brand, really started in Steve Job’s garage? Steve Wozniak says ‘not exactly’.2 Was Johnny Walker whiskey, the most valuable spirit brand, really ‘born in 1820’ when Johnny opened his first store?  No, the first blend wasn’t created until after Walker’s death. But despite their lack of veracity, these myths become gospel to these brands' evangelical-like followers. And their belief in these myths ultimately contributes to these brands' real economic value.

And that is what seems to be happening to the news. One need only look at the home pages of some US media giants to realize how dissimilar the news seems across sources.  Rather than covering events, each source appears to be curating stories that support their own brand narrative, seemingly in an effort designed to strengthen their connection with a specific audience.

In fact, according to Business Insider, since purchasing the Washington post Jeff Bezos 'has taken a hands on approach on the business and technology sides to reinvent the paper as a media and technology company.

'That's helped it take a more data-driven approach. It now employs common web strategies like "A/B testing" to track how different headlines and story framings affect readership for each story. It also created a program that takes articles from other publications and asks readers which ones they'd rather read.'

Thus, where current events used to unite us in common experiences, branded content serves to divide us through alternative realities. Consequently, we see people who wear the badge of their favorite news source as proudly as Ford or Chevy owners defend the virtues of their trucks against one another. 

How did this all happen? 

Three factors, all fueled by enabling technology seemingly converged to get us here:

1. The 'Baby Jessica' Factor - the need to feed CNN's 24 hour news cycle, in absence of any significant breaking news
   
2. The 'OJ' Factor - forever blurring the lines between news and entertainment
   
3. The 'Mickey Mouse' Factor - media consolidation that puts the ownership of news brands in the hands of entertainment companies
   

Where do we go from here?

Certainly, we can't go back in time. But if the name of the game is finding an unserved audience, perhaps the next big news brand will go back to covering events with no commentary, and let the 'do it yourself' news audience interpret the facts for themselves. Considering  that, according to Gallup, American's trust in the news media has fallen from 76% in 1972 to 32% today, there may just be a market for facts. After all, I hear that trust is a very strong foundation upon which to build a brand.

1 Source: Wikipedia
2 "The garage is a bit of a myth. We did no designs there, no breadboarding, no prototyping, no planning of products. We did no manufacturing there. The garage didn’t serve much purpose, except it was something for us to feel was our home. We had no money. You have to work out of your home when you have no money."  Steve Wozniak, Bloomberg Interview 2014

Moving Towards 'Generation None': The Implications for Ad Agencies and Brands

This weekend, the New York Times ran an opinion piece about ageism in the workforce. As longevity increases, and pensions are not what they used to be, many older workers are choosing to stay in the workforce longer...but they are not always welcomed with open arms. In fact, the article states that 2/3 of older job seekers have experienced age discrimination. 

New York Time Opinion Piece on Ageism

http://www.nytimes.com/2016/09/04/opinion/sunday/youre-how-old-well-be-in-touch.html?_r=0

Ageism appears to be a broad societal problem that affects some industries more than others. In fact, it is far more egregious in the advertising business. One need only compare the age distribution of the ad industry to the total workforce to see how young the industry skews, and how few opportunities there are for those 45 and older. 

Source: US Department of Labor

The market case against ageism

While the New York Times article focused on the merits of the work ethic and economic impact of older workers, in the advertising business there is a strong market case for an increase in older workers. The fact is that the market conventions that fueled the youth culture of agencies no longer apply.


One of the fundamentals ingredients of great advertising is deep customer insight that allows marketers to connect emotionally with their audience. That is why, historically, the age distribution of the U.S. population (and many other countries) drove much of the focus on hiring youth. As illustrated in these historical charts, for decades younger age groups represented the bulk of the population. While the population 'bump' may have migrated a to be a bit older over time, the 'cliff' at the the older end of the spectrum remained the same. 

During those same decades, audiences had relatively few media choices. Thus it made sense for agencies to skew their workforce to the under 45 crowd, as they would likely have greater insight into the prevailing mindset that was shaping the popular culture of the time.

Moving Towards 'Generation None'

But looking forward, we see a different picture emerging :

The 'cliff' is not as steep, and will all but disappears the next 20 years. More importantly perhaps, is that there are no real 'bumps'...the distribution curve is flattening out. We will have a population with no dominant age group...not the Boomers, not the Millennials, and not Gen Y or Z...essentially we are moving to 'Generation None'. Combine this with the  growing multicultural composition of the population, and the increasing fragmentation and customization of media and content, and you are left to wonder if we will be a nation of subcultures in which there is no dominant popular culture? In such a scenario, mainstream agencies will need to better serve a variety of subcultures.

One need only look to follow the money to realize that insight across all age categories should be valued by brands and their ad agencies.

In looking at the top ten advertising spend categories, most have a broad appeal that both mirrors and evolves with general population trends. Thus older buyer influence must be considered across these categories. Additionally, there are some categories that skew older, including three in the top ten: automotive, financial services, and pharmaceuticals. Yet, based upon the composition of the advertising workforce, it is highly likely that ads for these categories are being made by someone much younger, who may lack the insight necessary to deliver a compelling message. Perhaps that explains why these three categories generally exhibit some of the most formulaic banality in advertising today.

And while big agencies have earnestly begun addressing other diversity issues such as gender and ethnicity to better mirror the population, there has been much less focus on ageism. But if deep customer insight is critical in developing great advertising, then the ageism conversation needs to be elevated to a similar level. And the answer is not, as some have done, by developing niche agencies catering to Boomers, but rather by integrating a broader perspective across all subcultures into mainstream ad agencies.

  

Elon Musk's Master Plan Reveals His Secret: Tesla Was Never In The Car Business

This week, Elon Musk revealed his 'Master Plan Part Deux'. Within 24 hours, Tesla stock price had fallen 3.4%, and the press was less than kind in its critique of the plan.

Criticisms harped on several themes: that he was taking on an even bigger task than building a car company before he'd proven that his car company was viable; that he lacked focus; that the plan was too all encompassing and therefore unrealistic.

Is it possible that this criticism missed the point completely? For this criticism is based in the assumption that Tesla is in the car business. But it never has been. And in fact, 'part deux' is incredibly consistent with statements Mr. Musk made ten years ago. 

In revealing his first 'secret master plan' in 2006, he stated that Tesla's purpose was 'to expedite the move from a mine and burn hydrocarbon economy towards a solar energy economy.'

Revisiting Tesla's purpose frames 'part deux' in a new light, and diffuses much of the criticism. Moving too fast? Not when changing peoples' mind about what an electric car can be is just a baby step in transforming the mine and burn economy. Lack of focus? Not when focus on the end game hasn't wavered in 10 years. Too all encompassing? Not if you are set to transform an economy.

In his book, The Disruption Dilemma, Joshua Gans makes the case that if disruption is coming from a new way of putting the parts together, the solution cannot be to keep them separate--that you must build your entire organization around the new approach.

Likewise, one might argue that you must build your entire brand around the new approach.

So, as a brand, Tesla must leapfrog the competition bringing forward thinking brand values to the market, to support his ultimate purpose. 

Why? Because even though Tesla has excelled in over-delivering in the coveted automotive differentiators of styling, performance and safety, Musk knows that these differentiators are becoming less meaningful. And by shifting his focus beyond the car and driver, Tesla will be the first automotive brand to credibly define the new automotive differentiator...sustainability.

Other automotive brands struggle with this word. They know that increases in use of fossil fuel and coal in smog-choked countries like China is not sustainable. They know that increasing the number of personal vehicles in congested mega-cities like Mumbai and Guangzhou is not sustainable.  They know that rising global traffic accident fatality rates beyond the current ~1.24 million per year is not sustainable. Simply put,the current automotive model is not sustainable to the environment, to the economy, or to society.

Yet, most automotive brands, who are in the primary business of manufacturing personal internal combustion vehicles for driver's use, cannot put sustainability at the front and center of their brands. Instead, they relegate it to a CSR initiative, while conveniently taking pieces of sustainable solutions and retro-fitting them into their current brand definitions. That's why BMW's describes autonomous driving as expanding the definition of driving pleasure, while Volvo uses it to support their already strong safety equity.

But the future of our global economy is dependent, not on the rise of personal transportation, but rather, on the rise in clean, safe, efficient forms of transportation that will allow individuals and societies to thrive. And that's why, despite short term investor skepticism, Tesla is really the only sustainable transportation brand  in the market.

(authors note: Tesla's stock price has rebounded, and at this writing is up slightly from pre-part deux prices. Is this reaction to the announcement that Tesla will speed up the completion of its gigafactory, seen by most investors as an integral part of Tesla being a viable car company...or perhaps a sustainable transportation brand?...stay tuned.)