Image Matters, Ask Home Depot’s Former CEO Bob Nardelli

Former Home Depot CEO Bob Nardelli and General Electric CEO Jeffrey Immelt provide a case study in divergent approaches to running a company post Enron.

One strategy depends on numbers alone to trump all. The other balances the scales of capitalism with image.

The styles of these CEOs and others are contrasted in a recent Wall Street Journal column in the context of what caused Nardelli’s ultimate unraveling. Columnist Alan Murray characterizes Nardelli’s extravagant compensation package as his “biggest problem.”

But how did his compensation become a problem? Presumably it was not a problem for Home Depot board members who hired him after Immelt beat out Nardelli for the top spot at GE. Compensation became a problem only after his image—weakened by his own inaction, miscalculations and incommunicado—left him vulnerable to stakeholder action on a number of fronts.

Shareholder return suffered prompting protests despite doubling sales and earnings. Strategic shifts sparked a proxy fight for board seats. And, writes Murray, Nardelli didn’t apologize for his pay package, nor did he reduce it.

Obviously the numbers played a role in Nardelli’s exit, but his lack of initiative and communication about issues important to influential audiences provided the path to his ouster. Hind sight is 20/20, but there is more than a fighting chance that Nardelli never would have had to apologize for his salary, nor reduce it, if he had taken better care of his image.

Image, contrary to popular wisdom, is more than a glossy photograph. Immelt, whose image graces plenty of magazine covers, understands this concept.

Immelt, according to the column, also generates sound operating results and a languishing stock price. Yet he is perceived as one of America’s leading CEOs. Granted, he has taken initiatives that Nardelli did not take, such as tying his salary to performance. But he also took action and communicated to his stakeholders about other important issues, such as the environment.

Effective, forward-thinking executives of both public and private companies understand the scales of capitalism are balanced with image and performance, not one over the other.

P.S. One other note for those who aspire to the top exec seat, Nardelli did attempt to improve his image, but too late into his tenure. Aspiring c-level execs would do well to consider image as part of their strategy from the start. And, existing CEOs would do well to start paying attention to image before most consider it necessary—when trouble starts.

For more on how CEOs from Procter & Gamble, Wal-Mart and Citigroup handle the modern image demands of CEO-ship, order a back copy of the January 4 Wall Street Journal. Or, if you already subscribe, access the online archives. It will be time well spent.

Five Keys to Transitioning or Consolidating the B2B Brand

How do we transition our business from one brand identity to another? From two or more brands to a single brand? Since we're doing it to spur growth, how do we add new customers without losing the old ones along the way?

If you're not asking these questions now, don’t get too comfortable. A number of marketplace realities are conspiring to make brand transition and consolidation inevitable for increasing numbers of B2B companies. These factors include:

• The well-publicized glut of investment capital sitting on the sidelines...for now
  
• Increasing acceptance of the notion that the fewer brands, the better
• Investors’ unwillingness to wait patiently for organic growth to deliver the top-line growth and earnings they demand—and the resulting push to grow through acquisition
• And so on
  

So what are some of the considerations for marketing leaders faced with the task of communicating a new or consolidated B2B brand? Once you've determined what the new entity should be called (and why), and how you'll position the new brand, consider the following:

1) Audit your touch points - Launching a marcom campaign to introduce the change and communicate its value is a no-brainer. But it’s just as important for companies to audit every recurring touch point with its key audiences—customers, prospects, investors, employees, recruits, suppliers, etc.—to consider whether that touch can also be a vehicle for communicating the change. E-mail sign-offs, invoices, quotes, paycheck envelopes, call centers, mailing envelopes and the like all present opportunities to reinforce the new brand.

2) Don’t rush the transition - It will take long enough for people to get that the company and brand they’re used to will now be known as something else. It may take even longer to convince people there’s a good reason to stick around—especially as your comeptitors use the change to create doubt in the minds of your customers. Plan on spending at least a year reinforcing not only the name and brand narrative of the new entity, but the fact that the new entity includes the best parts of the old.

3) Bridge the gap - As is so often the case, B2B practitioners can learn much by observing their counterparts on the consumer side. AT&T’s marcom plan for its forthcoming absorption of Cingular may provide a wealth of lessons over time. For now, it’s helpful to see how AT&T is deploying communications that bridge the gap between audiences’ understanding of the two brands today, and how AT&T wants them to think about the new brand tomorrow.

4) Don’t skimp on the employee communications – Painful ubiquity of the term “brand ambassadors” notwithstanding, it’s essential that employees understand and support the transition to a new name and brand. If they don’t understand the reasons for and benefits of the change, or are in a foul mood about it, they’ll probably share as much with your customers and prospects. Use every means at your disposal to reinforce for employees why the new brand is good for them and customers (assuming it is). And make sure your audit (see #1, above) includes employee touches, so you can use those to reinforce the strategy and benefits of the consolidation/transition.

5) Listen, measure, adapt - Create a transition plan, but be willing to adapt the timeline based on results. Use employee and marketplace surveys to assess whether audiences are getting both messages about the change: 1) that it’s happening; and 2) what they stand to gain. Be willing to move implementation timelines up or back depending on what you’re seeing.

Recruitment Site Done Right

I've posted before about my assessment that Accenture represents the very best in brand-based marketing communications in the B2B space.

Further proof comes by way of a recruitment site you'll find here. The site appears to be aimed at recruits in Sweden, Denmark, Norway and Finland.

Accenture's site is fun without being goofy. The "Tell a friend" link offers a quick and easy way to leverage the site's obvious viral potential. On the whole, the site is a great example of what so many B2B companies should do but don't: create a standalone, online recruiting environment that provides prospects with an engaging, memorable experience.

Given the ever-increasing importance of recruiting and retaining top people, others would be wise to follow Accenture's lead.

Speaking of viral--kudos to Bob Rosswaag at JWT Specialized Communications in NYC for the tip.

Searching for a Cause

Last week, I received an email from someone I volunteer with at a local non-profit. Turns out our charity has been registered with a new free-search engine called GoodSearch. Powered by Yahoo, GoodSearch donates an average of $.01 to the charity of your choice for every search you make.

You can either associate your search with your charity --- there is minimal setup that goes into it if you are the first to register a particular nonprofit --- or you can choose the “Charity of the day” in the upper-left corner of the site.

After learning about this new concept, I have a few observations: first – another great Web 2.0 idea!; second – how can I get more people to use it?; and third – what a simple, engaging way to apply the principles of cause marketing. (See also Motorola’s (Product) Red campaign.)

We’ll use this blog as an example. I’m giving props to GoodSearch and linking you to the site: http://www.goodsearch.com/. By promoting GoodSearch on our blog, we create an actual, measurable result for the cause—while showing our compassionate side as corporate bloggers. With sensitivity to everyone’s differing opinions and beliefs, it’s a no-cost, non-partisan move that gets us out of the muck about “what we support” but answers a confident yes to the question of “whether we support charitable causes.” It’s clearly a cause marketing win-win scenario.

So click through to GoodSearch, find a charity you support, do a search to learn more about your cause and share it with friends. Better yet, if you really love GoodSearch, make our blog your home page and then click to GoodSearch.

The Power to Say "No"

“The biggest single mistake companies make is trying to appeal to everybody.” So wrote Al Ries and Jack Trout in their landmark book Positioning, written two decades ago. Today, the wisdom behind that line is as sage as ever—whether in branding, or in business.

Ries and Trout’s message for companies was at once simple, profound and frustrating: the most compelling identities limit the way audiences can think about you by saying as much about who you’re not as who you are. But sacrificing peripheral possibilities—markets, recruits, alliances, revenue channels, messages and customers that don’t fit the go-to-market strategy—is a tough move for many companies to make.

That’s especially true for companies owned and operated by their founders. Saying “no” to possibilities runs counter to the entrepreneurial principle that if you can dream it, you can—and should—do it. Or at least try to do it.

B2B leaders willing to say “no” for the sake of staying on strategy often find it not only profitable from a business standpoint, but personally liberating. No longer do the company and its people have to worry about trying to be all things to all people. Resources from Sales, Marketing, HR or Operations are no longer expended on things that fall outside the company’s focus. The market for said things may be strong. But if the company can’t do it as well as or better than competitors, the company doesn’t do it at all. For employees, that can come as a relief, since it frees people up to focus on what they know.

Say "No" For The Brand's Sake
For B2B companies, saying “no” can also help protect the brand. Clients of ours who’ve had the courage to position themselves at a specific point on the continuum have reaped the business rewards of defensible differentiation. That includes clearer, more compelling identities in the minds of customers and prospects. Sustainable revenue increases. A better story for top recruits. And greater enterprise value.

That’s because branding a B2B company—like running a successful business—is in part about amassing the power to say “no.” By resisting the urge to increase short-term sales by depicting themselves as generalists, companies win in the long-run. And so do their customers.

It’s not easy. It takes time to build the financial strength and reputation that are prerequisites to turning down new revenue opportunities. But life is better when you know who you are, and who you’re not—and act accordingly.

How believing in a brand can keep the paparazzi from your doorstep.

This is a story about Miss U.S.A., Rosie and Donald Trump. Stay with me here, there is a brand lesson.

Recently Miss U.S.A. made a few bad choices in the New York City bar scene. So much so, that it came to the attention of Donald Trump. The Donald, being a part owner in the Miss U.S.A. pageant, had to make a judgment call, which he did. He reviewed the allegations, interviewed the reigning Miss U.S.A. and decided she deserved a second chance. Great.

Rosie, star of…well…I’m not sure, pops off with this salvo: “Who is Donald Trump to be the moral compass of this young girl?”

The Donald reacts instinctively and goes on the attack. A nasty war is played out in the media.

Seems to me, if the Donald truly understood that he owned The Miss U.S.A. brand and what the brand means to so many, his instinctive reaction would have been different. Perhaps something like this:

“….I am the guardian of a time honored institution—Miss U.S.A. Out of respect for all those who have competed in the past and will compete in the future, it’s important to hold all Miss U.S.A.’s to a high standard. That’s why I reviewed this case with particular interest and have determined that she deserves a second chance.”

If the Donald truly understood that this was a brand with deep roots-- not a dormant, non-dimensional asset to be bought and sold, he may have given an answer that put Rosie in her place and elevated the brand.