NEW INC. MAGAZINE COLUMN BY HOWARD TULLMAN

 

The Lesson of SI's Epic Brand Failure

Once one of the most popular magazines in the country, the title's most recent troubles point to the perils of not investing in the future because the past was so great. 

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@HOWARDTULLMAN1

While there's some modest prospect that Sports Illustrated will once again be resurrected from the shadows of its most recent fiasco -- most of its journalists were laid off -- it seems much more likely that we've seen the last vestiges of a brand-based venture that lost its heart and raison d'etre long ago. The title was essentially rented out by its owner, Authentic Brands Group, to be published by a company called Arena Group, which got caught grasping desperately at such solutions as AI-faked articles by invented authors. SI reached its peak circulation about 30 years ago and things have been headed downhill ever since. From weekly to monthly to nowhere.

Plenty of print periodicals have passed away and many others are circling the drain for obvious reasons, but the SI saga offers some specific lessons for new business builders that are especially instructive when you consider the power and presence of sports in our lives today. The primary lesson: regardless of how big the wave you're trying to ride, if you don't stay well ahead of the currents and rough waters, it's likely to roll right over you. And no amount of semi-naked, swim-suited models is gonna keep you or your business afloat.

If the cover of Rolling Stone was the golden ring for artists and bands in the rock business, then Sports Illustrated was the biblical equivalent for jocks in every sport.  And, truthfully, SI's powerful brand, slick photography, great writing, and its broad demographic reach was even more substantial than Jann Wenner's rag. And far more valued by mainstream advertisers. But time has a nasty way of turning your attributes into ashes if you don't keep moving forward. There were plenty of signals over the years, but they were largely ignored by SI's founding owner -- Time Inc. and later Time-Warner -- because, when you're successful in the moment and resting on your laurels, you forget quickly, and learn only slowly and painfully.    01:23

Here were the three major things that SI's owners and managers forgot.

(1)   Your Brand is Shorthand for a Promise.

That promise is to consistently deliver to your clients, customers, and the public a defined and readily understood level of performance, products, and services. A brand can mean new, fast, exclusive, or unique. But today, everything is everywhere, and no one wants to wait for anything, so the competitive stakes are radically different. The longer you've been around, the more concrete your brand promise, your commitments, and the crowd's expectations become; but, when the alternatives are just a click away, your fans' loyalty is fluid and flighty. If you drop the ball, the crowd is quick to move on. Try to do things on the cheap or in a half-assed manner, or the same old way, and they're gone. It's become a "what have you done for me lately" world.  Sports Illustrated used to be special, now it's "so what," too little, too late, and nobody cares.

(2)   Value is in the Eyes of the Beholder.

Most honest marketers will tell you that it's the crowd, and not you or your cronies, that keeps score these days and decides what's worthwhile and worth wanting. In an environment of rapid and rabid social media - where everyone's a broadcaster - the crowd controls your brand and your reputation. If you're lucky, you're still hanging on for dear life and trying to outlast the bumpy ride. Brands like SI, which were still stuck in the dark, pre-digital ages, thought that their historical brand equity was enough to allow them to command a premium price for their traditional, sleepy, and largely unchanged offerings. But the real world thinks otherwise. No one wants to pay up for old news. And honestly, no one wants to "Be Like Mike" anymore either. If you don't grow, they take the ball away and you have to go.

(3)   Nostalgia can be a Narcotic and Put You to Sleep.

It's easy and often a lot less painful to look backwards and focus on the glories of the past, but that's dangerous in times of rapid change. Celebrating "the way we never were" or constantly rehashing the old days allows us to embrace and be seduced by the illusion of permanence.  Saturday Night Live is a great example of the risks associated with trying to rebottle the old brews. Justin Timberlake's recent embarrassing appearance was a sad commentary on another show that's lost its relevance, and most of its audience, along with a guy trying to get back in the game whose talents are toast.

Over time, even the best brands and businesses can become static and inflexible as well as very difficult to extend to seize new opportunities. Tradition and "tried and true" rationales are too often convenient excuses for businesses that aren't interested in change or making critical and costly investments to upgrade, expand and improve their products.

Sports Illustrated may only be the latest casualty in a long list of brands and businesses overtaken by change and new technologies, which includes Kodak, Blackberry, AAA, and the entire Swiss watch industry. But it won't be the last. Time is ruthless. The message is clear: if you're not actively moving your business forward, you're losing ground and slipping backwards - whether you know it or not. As long as you act as if you're coming from behind, you have a shot at staying ahead.

NEW INC. MAGAZINE COLUMN BY HOWARD TULLMAN,

 

Upgrade or Die

Companies such as AAA are being overtaken by technology. But they still have huge customer bases. The challenge: offer customers a new, differentiated product before that connection fades. 

BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@TULLMAN

The only survival path in the new digital age for many older firms with huge customer bases such as cable television, local newspapers, and the home alarm companies like ADT is for them to continually add new features and functionality to their basic bundle of services. They need to do this immediately, before millions of their customers -- who are accustomed to paying fees that automatically renew monthly or annually-- figure out that they're paying too much for what little value and utility they're actually getting from their provider given the existence of so many largely "free" alternatives.

These companies have a huge advantage in that they already communicate with their customers on a regular basis through reports, billings, newsletters, and email blasts so they have effectively zero incremental costs of customer acquisition in terms of promoting new offerings. But, of course, these kinds of tactical upgrades don't happen by themselves. And simply adding "me-too" products that don't make a demonstrable difference to customers doesn't help anyone's cause.

For many traditional product and service providers, the risks of rejection are rapidly rising, because the mobile and digital world has moved beyond the historical offerings of these companies and either improved upon or entirely obviated any need for their products. In many cases, the mistakes these companies made in failing to recognize, adapt, and move promptly to keep up with the changing times are unrecoverable. Too many have simply been greedy for too long - unwilling to impair today's cash flows to prepare for tomorrow. Kodak "moments" are no longer captured on film, long distance charges are history, bank checks and credit card scanners are quickly being phased out, and it's far easier to catch Covid these days than a cab at the corner. It's brutal to realize that you're a buggy whip. 

Cutting the cord won't simply be a cable TV phenomenon for much longer, even if cable is the all-time leading grudge buy and the current league leader in getting dumped. Streaming packages like Netflix aren't too far behind. Nobody needs four different streaming services. These days every consumer is looking to save money, eliminate old and useless bundles, and free themselves from "ghost" subscriptions. There's even an app called Truebill that helps people tap and toss these unused and un-useful artifacts.

Interestingly enough, the likelihood that buyers in any given market will wake up one day and drop a certain product or service is highly variable and depends on a number of key factors. The key determinants include: (a) how often purchases are made, (b) how frequently the consumer otherwise interacts with the service, (c) how significant (emotionally or dollar-wise) the amount of the purchase is, (d) how different or costly the service is compared with other available offerings, and (e) how easy it is to switch. This is why the cable providers were fat and happy for so many years since it was harder - especially given exclusionary territorial protections - to dump your cable service than to divorce your spouse. Life insurance is another one of these areas where the insurers' basic philosophy is - no pun intended - to let sleeping dogs lie until they die.

For other players, there are still opportunities to react and respond to the oncoming changes in their particular marketplaces if they're mentally prepared to take the necessary steps and make the required changes. But the moves they make can't simply be more of the same. Sadly, our view of the future is too often limited in perspective and limited as well in considered alternatives by our existing reference points. Adding commoditized offerings readily available elsewhere to increase weight and volume is really nothing more than an effort to build bigger, boring bundles, which won't excite anyone.  Even a big box of the best candles is no match for a light bulb. 

If the proffered responses are tepid and tentative, there's very little chance of serious adoption by current customers and few realistic prospects for material success. It makes sense to constantly be looking for adjacencies and opportunities to land and expand and to add new revenue streams to your base, but these enhancements and extensions are likely to be only modest movers of the needle.

The example I most often use is the American Automobile Association (AAA), which has around 57 million members nationwide. When I was growing up, AAA provided two primary benefits. The first offering was TripTik, which was basically a loosely bound set of sequential road maps that would show you how to drive from Point A to Point B. It also served up information about all the interstate attractions you might enjoy along the way as you and your family shuttled from one set of Golden Arches to the next. The second service was Roadside Assistance, which offered towing, flat tire changes and battery boosts.

Both services made sense and provided real value at a reasonable annual cost to millions of AAA "members" until the arrival of free turn-by-turn navigation on every cellphone. Auto manufacturers then included in-car guidance and emergency notification features as standard equipment. Similarly, every upscale manufacturer has incorporated towing and other roadside services in their basic support packages for owners along with the assurance that they would be dealing with experienced support personnel from local dealerships rather than some random tow truck guy.

Unfortunately, AAA's response has been mainly more of the same. Offering home and renters insurance has basically been a bust with less than 1% of their members signing up.  Car loans, credit cards and mortgage services haven't done much better and random travel services and purchase discounts didn't make a dent. There were simply no compelling reasons sufficient to overcome the consumers' eventual indifference. And, of course, there was nothing new to see or offer. To move the needle in cases like this, you've got to jump ahead and leapfrog the mass of commoditized competitors.

Porsche did it right by forming a partnership with Mile Auto to offer pay-by-the-mile Porsche-branded auto insurance to its high-end owners, whose annual mileage was always a tiny fraction of the national averages. This was a clear benefit, a carefully differentiated offering, and a real savings and service to its owners.

AAA needs to find similar prospective, rather than reactive, solutions. A perfect example of a next generation offering that would be ideal for them is a startup called SparkCharge which provides EV charging anytime, anywhere. This enables customers to charge their electric vehicles on demand and without the grief and hassles of finding the "right" charging station, hoping that it's not occupied, and waiting for the charge to be completed.  They can be in a meeting, at a restaurant, watching a movie or a ballgame and know that their vehicle is being serviced at the same time.

It's a perfect fit for AAA's customers now and even more so in the future and a great marketing channel for SparkCharge to reach millions of precisely targeted prospects at little or no cost. There's nothing better or smarter for a new business to do than to ride someone else's already-built rails.

The bottom line is that sticking more of the same old stuff into your offerings might make your marketing people feel like they're keeping busy and earning their keep, but it's not an effective strategy. It's like talking back to the TV.  It may make you feel better, but it doesn't make a difference. If you've got nothing new, you've got nothing going for you.