Brand Leaders 2005
October 1 2005 by Rebecca Fannin
Steve Jobs (#1)
Steve Jobs (#1)APPLE COMPUTER
It was 1984, and Apple Computer had just plunked down $1 million to air a revolutionary TV commercial during the Super Bowl promoting its about-to-be-released Macintosh personal computer. Trouble was, Apple’s board of directors previewed the spot, determined it the worst commercial they had ever seen and asked CEO Steve Jobs to nix it. When Jobs couldn’t find any takers for the airtime and couldn’t dig up an ad to substitute, Apple ended up running it anyhow. The commercial, which featured Orwellian scenes of IBM PCs being shattered by a breakthrough new machine, went on to generate tons of publicity for Apple. Sales of the Mac took off. “That commercial generated great buzz,” says Mike Murray, Apple’s vice president of marketing at the time. “Steve just has an intuitive feel for marketing,”
Some 21 years later, Jobs is still showing off his marketing smarts and his passion for the business. His new digital music products, iTunes and iPod, have become part of pop culture, with some 16 million iPods sold and 340 million iTunes songs downloaded, and his computers aren’t doing badly either, with PC growth rates of 10 percent for the past five quarters. Jobs himself has become an iconic brand, wearing his trademark blue jeans and black tee-shirt as he struts on stage and demonstrates his latest wares.
It should be no surprise then that Jobs has come in first in our second annual ranking of CEO brand leaders, up from No. 3 last year. This survey, done with New York-based branding consultancy Lippincott Mercer, asked some 450 CEOs and chief marketing officers to evaluate CEOs on numerous branding criteria such as design, innovation, marketplace vitality and brand-image management. A ranking of the top 25 CEO brand leaders was developed from the respondents’ scoring (see page 26). Jobs took the top spot this year by a clear margin, with 28 percent of those surveyed voting him the best at brand leadership. As one respondent put it, “Steve Jobs has managed to make style a hallmark of Apple, in the notably bland consumer electronics market. In a sense, he is the brand.”
Jobs’ brand management is at least partly instinctual, as he is not one to depend upon focus groups for the answers. Aides say he doesn’t even talk about “branding.” Instead, he prefers to look ahead and try to recognize breakthrough technology-then work with teams to develop innovative products, most often with striking visual appeal. It is not rocket science, but it does require imagination, vision and attention to detail coupled with an artistic sense. “It is instinct versus market research, and an ability to take a vision and run with it,” says Ken Roberts, CEO of Lippincott Mercer. “He is able to transform industries, and among Apple followers, it is almost a religion.”
Several other CEO brand leaders use personality to enhance their brands, such as Virgin’s Richard Branson.
But a majority of winners don’t seek to personally represent their brands. Meg Whitman at eBay tries to avoid being too conspicuously identified as personifying the company’s brand. Compared with the earlier flamboyance of founder Herb Kelleher, Gary Kelly of Southwest Airlines is a listener and nurturer. And few experts would accuse Mike Eskew at UPS, Robert Ulrich at Target or Lee Scott at Wal-Mart of foisting themselves into the public consciousness. These CEOs rely more on process.
Eskew, for example, recently created a new position of senior vice president for communications and brand management, and expanded his management committee to include this post. The company’s Web site now sports a separate section devoted to brand-management issues, offering up information about the company’s new ad campaign and even a history of the UPS logo. Eskew also created the company’s Brand Forum, which is attended by marketing staffers, C-suite execs and officials from subsidiaries and international offices.
The best branding practices that all these CEOs share is they know it takes more than just marketing and advertising to build a brand. It requires coming up with innovative products that go way beyond the ordinary, offering unparalleled customer service and developing consistent marketing messages that break through the clutter.
Jobs has transformed three different businesses. He adapted window-like graphical interfaces and eliminated cumbersome DOS-based commands with the launch of the world’s first PC for mass consumers, the Macintosh. Then, after being tossed out of Apple in 1985 in a CEO struggle with former Pepsi marketer John Sculley, Jobs went on to form Next Computer, and struck gold again when he acquired Pixar and began making award-winning animated movies such as Toy Story. He returned to Apple in 1997.
“Steve Jobs doesn’t stay connected to consumers. He leaps ahead and waits for consumers to catch up to him,” says private equity partner Guy Kawasaki, one of the original Apple “evangelists” who convinced developers to write software for Apple. “You could ask yourself, €˜What is the big deal about iPod and iTunes?’ and say, €˜Well, any company could have done that,’ but then nobody has.”
Jobs’ mastery of detail is so well-honed that some have labeled him a control freak. Public relations consultant Andrea Cunningham, who worked with Jobs on the launch of the Macintosh and Next, recalls planning a press briefing at New York’s Carlyle Hotel, in which Jobs insisted that the suite must have a grand piano, that strawberries and cream must be served from the piano top and that white, long-stemmed Calla lillies must adorn the space. “He is obsessed with details, and with results, but the amazing thing about working with him is that he inspires you to do better,” she says. “You have this feeling that you are going to change the world with him, and it can justify the 90-hour weeks.”
The Steve Jobs mystique is no doubt furthered by strict control over his public persona. Jobs typically limits his public appearances to trade shows of Apple followers or marketing events, and he rarely grants press interviews (and, alas, Chief Executive was no exception). Even managers at his advertising agency, New York-based TBWA, do not talk to the press without Jobs’ permission, though the agency shares credit for the Apple success story, with such arresting ads as the iPod-touting dancing silhouettes.
But it is hard to argue with the results that Jobs has achieved. The iPod, introduced in 2001, commands a 76 percent market share among MP3 players, and iTunes software, launched in 2003, has captured 70 percent of the market for songs downloaded legally from the Web. Apple Stores opened in 2001 and there are now 109 stores worldwide, welcoming 9 million visitors a week. Apple posted the highest revenues and earnings in its history with third-quarter 2005 revenues of $3.25 billion and $320 million in net profits.
At the heart of Jobs’ success has been his ability to differentiate his products. In setting out to enter the MP3 market, for example, Jobs recognized that piracy-or downloading music for free from the Internet-was Apple’s biggest rival. So he designed the iPod with add-ons like the ability to get a 30-second preview of a song or look at playlists created by celebrities. Instead of a subscription service, each song is priced at 99 cents. Today, an iPod economy has grown up around the music listening device, and podcasting-the downloading and playback of files-has taken off.
Many of the CEOs who ranked high on the Lippincott Mercer/Chief Executive study, whether they are public personalities or not, share Jobs’ ability to connect emotionally with consumers. “They have a sixth sense about it, an ability to align their brand with the promise and experience,” said Lippincott’s Roberts. Mere advertising, it seems, is less important than the ability to dial into what consumers might want or need-even before they know it.
Gary Kelly (#8)
At Southwest Airlines, CEO Gary Kelly has a more down-to-earth approach to branding than his airline’s founder-the larger-than-life Herb Kelleher. That may be what Southwest needs these days. It is in some ways at the opposite end of the spectrum from Virgin, with low costs as its key marketing motto since its launch in 1971. Nevertheless, it relies on good customer service-not just low fares-for branding superiority. Kelly says good service helps set Southwest apart from competitors when customers can easily search for fares and purchase the lowest-priced ticket online. “We like to offer high-touch, extra-special customer service that can’t be matched,” says Kelly.
New to the CEO seat last year, Kelly, a Southwest career veteran who rose through the ranks as a financial executive, nonetheless has an innate sense for marketing. “Our brand name is one of the most precious things we have,” he says. “The brand comes first, and the CEO needs to own the marketing function.”
To be sure he does, Kelly now sits on the airline’s top-level marketing committee, which includes C-suite execs as well as representatives from external marketing partners.
Since becoming CEO, Kelly has spearheaded a drive to elicit more feedback from customers. He participated in two all-day meetings of three sessions each with passengers to hear their likes and dislikes about Southwest. “It helped me to prioritize the things we need to work on,” says Kelly.
The most common complaint was about getting from the curbside at the airport into the airplane seat. While Southwest doesn’t have much control over airport security procedures, the open seating on Southwest does encourage passengers to board quickly- or risk sitting in the middle seat.
Richard Branson (#9)
It would be safe to say that Richard Branson, CEO of Virgin, is able to rouse customers with the sheer force of his personality-and, of course, with stunts such as around-the-world hot-air balloon rides. One respondent to the CEO brand leadership survey commented that Branson “lives and breathes the brand-in fact, he embodies the Virgin brand.”
Branson readily admits that putting himself “out there to put the company on the map” has helped to build the Virgin brand. “I probably use myself to project the business more than most CEOs,” says Branson, who adds that trans-Atlantic airline entrepreneur Freddie Laker counseled him early on in the art of self- promotion. But Branson also advises other CEOs to “get the product right and it will market itself.”
Virgin’s innovative customer service, offering such treats as on-board massages, manicures, bars and hair salons plus Jacuzzis and spas at airport lounges (recently introduced at London’s Heathrow airport), wins high marks. Such investments in creature comforts even in the aftermath of 9/11 have further boosted the Virgin brand, and quick responses when errors have been made hasn’t hurt. After introducing slick red leather recliners in first class in mid-2000 and realizing that passengers were sliding down in these new seats, Branson spent some $150 million on a revamped seat.
Likewise, after a $132 million investment in 2001 on a new “upper-class suite,” with wider seats and flatter, larger beds for first-class passengers, Branson had to go back to the drawing board when passengers complained that the cabin’s super-sleek lights made reading difficult. He wrote letters to all first-class passengers, acknowledging the problem. Soon, better lights were installed. This attention to detail surely contributed to Virgin’s 26 percent increase in business travel this year over 2004.
“What I like to think is that we are delightfully surprising the customers,” says Branson. Priding himself on being a “reasonably good listener,” Branson credits many new ideas to passengers and staff members. The idea for on-board massages happened to come from his wife’s massage therapist.
Branson, who has made a career out of extending the Virgin brand name across a host of products, has found that differentiating products and services is the key. Virgin Cola, by contrast, quickly fizzled against Coke and Pepsi because “we just couldn’t make a big enough difference” in that business, he acknowledges.
Branson has now set his sights on space. When Virgin launches its SpaceShipOne into orbit within a few years, Branson intends to be on board the first flight, before opening it up to passengers who can afford a cool $150,000 for a ticket. Branson is clearly willing to try almost anything-and he’s not afraid to quickly shift gears when things don’t work.
Mike Eskew (#24)
Little more than a week after Hurricane Katrina stormed the Gulf Coast, UPS CEO Mike Eskew paused to discuss the company’s recovery mission in the context of what it means for the UPS brand. Here are excerpts:
How does crisis management reflect on the UPS brand?
We have regular disaster drills, but you can never prepare enough, particularly when you are delivering 14 million packages every day. Part of our brand identity is the day-to-day delivery of packages and the cadence of that in everyday life. People count on us to be there. Yesterday (Sept. 7), we were able to get 17 drivers back to their jobs, and people on the streets were telling us that this is the first hopeful sign they’ve had: When UPS is back on the job, then things will get back to normal.
How are you bringing operations up to speed?
We have a three-pronged approach- first, our people. We have 2,000 people in the afflicted area; 1,300 are out of work, and we haven’t heard from 300 of them yet. Second, our customers. We have seven facilities in the New Orleans area, and they are inaccessible, with our biggest facility truly under water. Before Katrina hit, we managed to stop all shipments into New Orleans and return those packages to the shippers. At our facilities, we were able to get out some packages, and we’ve informed those shippers with packages still there. The third area is a relief effort. Right now, we have a plane loading in San Diego that is bringing blankets and food for the refugees in Houston.
UPS depends upon its employees to make good on the brand promise. How are you reassuring them now?
When I decided to reposition UPS from a small package goods delivery service to a global commerce company and to move from a product to a solution approach, we stressed the importance of one-to-one communication with customers. We emphasized to our employees that we can’t realize this vision without their heart and soul in it. One step I have taken is to tell every employee that they will get paid during this period, and that we will find work for every single one of them in our operation or relief efforts.
How involved are you in branding missions on a typical day?
CEOs and details don’t go together. I am the brand steward and I set the tone and the vision-and also tell our employees that we couldn’t be there without them. I feel it’s important to let our customers know they can depend upon us. For instance, I personally handwrite a response to each customer letter I receive. As CEOs, we can be seen as remote, but if you don’t take the time for such gestures, the company becomes a machine.
What was your biggest hurdle in the recent rebranding?
At first, I didn’t want a new logo because ours had been designed by our founder 40 years ago. But I realized that a new logo would go with the global commerce repositioning and the move away from the dated-sounding United Parcel Service to UPS. When I saw the new logo, I redrew it 10 times before I went back to our designers and told them I was comfortable with their original proposal. I thought there would be pushback to losing an old friend, but it has been well-received.