“The marketplace is a wind tunnel, and the wind wants everything to be the same.” 

That simple statement by Bruce Philp, branding guru to ING Direct and co-author of The Orange Code, is what makes identifying and landing new prospects so difficult. But being different from your competitors isn’t all that it appears to be.

In the second of three interviews with CZ, Philp debunks the myths of differentiation:

Brand & Strategy: What are the myths of differentiation?

Bruce Philp: I think there is just one dangerous myth: differentiation is rational. That’s fatal thinking.

How so?

There are two reasons–and the first is practical. There is almost no innovation that can be sustainably proprietary anymore. Performance differences are either so slight as to be irrelevant as a basis for choice, or they are impossible to own for long in a world where fewer people make things than sell them.

You can be Apple, and live what is surely the hell of having to beat yourself every time you go to market, or you can be P&G and make a full-time job out of engineering performance claims year after year. Those are successful businesses, there is no doubt, and it would be foolish to argue that it’s impossible to differentiate with innovation.

But, for most companies, innovation is expensive. And it’s often pointless, and very easily emulated by competitors who, maybe even with pride, see themselves as fast-follow marketers bent on commodifying their categories.

And the second reason why it’s fatal to believe differentiation is rational?

It’s more complicated. I think that consumers, regardless of what they may say in focus groups, don’t want the burden of comparison shopping for everything on the basis of rational performance. It’s a lot of work, and it puts too much responsibility on them. They want a proxy for that.

A proxy for what?

Consumers want a reasonable excuse to make a choice that is right for them and not feel vulnerable as a result. Very frequently, this is the job of a brand. People look at what they think a brand stands for, what sense they have of its past conduct in this regard, and the authenticating coherence of its presence in the marketplace. Consumers ask, “Do the values motivating this company align with mine, as they relate to the product I’m about to buy?”

And if the answer is yes?

Then the choice begins there, and not on a spec sheet. It’s not very different than the way we would pick an auto mechanic. I can’t judge whether the guy who’s going to work on my old sports car knows what he’s doing, but I can intuit his love of cars, I can see that his workshop is clean, and that he seems to take pride in his work. I can be reassured by the way he looks me in the eye and firmly shakes my hand.

So differentiation is instinctual.

Yes. The door to trust is opened emotionally and instinctually. Only after that is it about performance.

I think this exposes differentiation for the art it truly is. The best work I’ve seen done in this part of the branding process has always started not with what a product can do, but with who made it and why. Almost unfailingly, that leads you to the basis for sustainable differentiation. This type of differentiation is virtually immune to what competitors might do, or how circumstances might force your hand tactically in the future.

Show me a category where this isn’t true, and I’ll show you a commodity business–now or imminently.

The new consumer chooses your brand (product or service) if they believe what the brand is saying is true. It’s a selective—and an emotional—choice. Marc Gobé, author of Emotional Branding, Citizen Brand, and Brand Jam (www.emotionalbranding.com) discusses this historical shift and how your leadership style must change to accommodate different expectations. 

Brand & Strategy: We’re awash in brand clutter from the last three or four decades. How does that clutter shape the way people make buying decisions?

Marc Gobé: We are back to reality and normal branding, not excessive branding. The past six or seven years, there was an uncontrolled rush towards money with no principle whatsoever. I don’t think I saw any real branding for a few years. The money was there for the taker. Business upheld a ‘grab it’ strategy rather than trying to make an effort to bring consumers towards their brand.

One of the expressions of the excess was the illegal billboards in New York and L.A.

Is there a fundamental shift in the minds of consumers in how they approach spending?

As Baby Boomers head for retirement, they are going to be spending less. Right behind them is Generation X, comprised of 47 million, which has lost the buying power that Boomers had. The millennial generation brings a whole new set of values. Their concerns are going to be the environment, and they are clearly looking to conserve energy and buy less; they’ll be a lot more sensitive to the impact of their buying options.

People are choosy; they are not free-spenders. The challenge for businesses will be to give them freedom to buy their brand. That’s real branding. The biggest revolution, though, is people being able to talk to each other about brands.

How is that different from a generation ago?

The new media technology has made it so that the success of a brand is based on how open they are with these consumer communities. Consumers have a personal relationship with the brand; they have to believe what is being said.

In reading about the founders of Google and Twitter and Facebook, I found that these people all have one thing in common: They aren’t Jack Welsh – the iconic former GE leader! They got rid of the emperor complex. What’s interesting is that most colleges still train under the Jack Welsh theory.

What makes them different?

The new leaders expose themselves to criticism. They are open to dialogue. That is a new culture, which is the social media culture.

Take the CEO of Zappos.com, for example. At 31, he makes one dollar a year, even though he heads a large company. When he Twitters, he exposes himself: This is who I am, these are my finances, this is my business, and these are my values. He creates an open dialogue. He makes you feel like he knows you. He’s with his consumer. It’s a model of fairness, personal accreditation, and personal engagement.

Brands, then, are defined by authentic leadership?

Yes – where the reputation of the brand is strongly connected with the owner and how much people like them as individuals. It’s about humanizing the brand. That means a leader of the company Tweets: I’m locked out of my hotel room because I closed the doors behind me and I cannot get back into my room. That’s human, and we can relate to that.

The new generation seems to crave that, but what about the Boomers?

The Baby Boomers were trained to believe in any kind of dream that was offered up. They were told there were no limitations to dreams. It was about limitless opportunities. And they were willing to compromise their integrity for the acquisition of material goods, because those material goods defined who they were.

Now we are at a point of finding out that there are limits and that some of the dreams that were referred to us are unattainable. Hence, leadership has changed. People don’t want to hear that you’re going to take them to the moon. They just want you tell them who you are.

In a sense, brands have been lying to us for a long time.

Of course. But to be fair, everybody was on the same page. Somebody tells you, “I love you,” it’s not exactly true, but it’s kind of nice to hear. The game was played, and accepted–and it was good. And why not? Because really, there was not a lot of risk playing that game…until it got out of control. Think of the movie Wall-E: The younger generation is like robots trying to fix the mess. And consumers don’t want to be deceived anymore.

If you promote your company as green but at the same time you’re suing the state of California because you don’t want to abide by their emission standards, people are not going to buy your brand.

So how does an ordinary organization apply this shift to their marketing?

The new media technology has made it so that the success of a brand is based on how open they are with these consumer communities. Consumers have a personal relationship with the brand; they have to believe what is being said.

Who of us hasn’t heard employees and co-workers murmur, whine, or even holler, “Work sucks!”? 

To rally morale as well as results, consider a Results-Only Work Environment (or ROWE). In this environment, people can do whatever they want, whenever they want, as long as the work gets done. Work isn’t someplace you go to, it is something you do. And it doesn’t have to get accomplished from 9 a.m. to 5 p.m.

Sound too good to be true?

Cali Ressler and Jody Thompson, authors of Why Work Sucks and How to Fix It, successfully led the Corporate Headquarters of Best Buy, a Fortune 100 corporation, through just such a change, which resulted in improved employee satisfaction, increased productivity, lower turnover rates, and greater efficiency.

In the last edition of Brand & Strategy, Ressler and Thompson discussed the benefits of – and the objections to – a Results-Only Work Environment. Click here to read the first interview.

Here Ressler and Thompson share how to face the challenges of adapting to a new work foundation–and why this radical system actually works.

Brand & Strategy: Why deconstruct the old foundation of work?

Ressler and Thompson: The old way doesn’t work.

With ROWE, we’re setting up a new foundation that actually fits with technology advancements and the demands of people’s lives in the 21st Century. The rules, guidelines, and processes in office environments today are relics of the 1950s. We’re holding onto them hard and fast, at the cost of people’s health, families breaking apart, stagnant business results, etc.

And for what? To ensure that people are following the rules and we can keep the paternalistic leadership structure in place.

Time to break it apart and create the new game.

How have organizations with paternalistic leadership responded to your “13 Guideposts for a Results-Only Work Environment”?

Upper management generally freaks out. And rightly so: the Guideposts were created to intentionally provoke this response. The statements are extreme and buck the status quo like nothing management in Corporate America has ever seen.

We like to say that ROWE is the litmus test for leadership in organizations. They’ve been talking until they’re blue in the face about how much they trust employees, want to support their work/life balance, set the right foundation for them to innovate, and on and on. Then when ROWE and the 13 Guideposts come at them, they back down and say they’re “not ready.”

It’s about “walking your talk”–and most leaders aren’t up for the challenge.

Who is up to the challenge?

It takes a strong, courageous, progressive leader to say yes to ROWE and the 13 Guideposts. We’re working with some of them now, and we know there are more out there. And they will be the leaders of the future.

Why doesn’t ROWE work for some organizations?

Anxiety and fear.

During the process of converting to ROWE it is possible for leadership to make the decision to not move forward. They let their anxiety about giving employees autonomy get the best of them, and they call everything off. This is a very poor decision.

Why?

The message to employees is loud and clear: “I don’t trust you.” Once employees know about ROWE and that they’re moving toward this liberation and freedom, you can’t rip the rug out from beneath them without serious consequences.

It can be extremely detrimental to morale, productivity, and ultimately the bottom line for a company.

However, for those teams that commit to the entire ROWE process and fully embrace it, there’s no going back to the old way. Brains are rewired, and it would decrease productivity to return to the old way.

How long does it take for an organization to adapt to ROWE?

The process for this adaptive change is very important. Each step is carefully timed to allow the culture to evolve at the right pace. Going too fast or too slow can have significant ramifications on the work environment and productivity.

So the timeline for this change really depends on the size of the organization.

Organizations of less than 100 employees can go through the ROWE migration process in two months. Organizations of 500 employees can go through the process in about four months. Larger organizations take an approach where they go department by department; it can take between a year and three years for organizations of 1,000 or more to go through the process.

Once teams have gone through the change strategy, it can take anywhere from 6 months to 18 months for individuals to feel like they are “ROWE.”

You talk about “Sludge” – the caustic comments made by coworkers when you walk in late or skip a meeting that reinforce old ideas about how work gets done. How do you eradicate Sludge?

The biggest hurdle to eradicating Sludge is actually fighting the internal Sludge we all have.

Surprisingly, the Sludge that exists among employees – “Can you believe John came in at 10:00 this morning?” or “There goes Nancy to pick up her sick kid – wish I had a kid!” – is the first to leave the environment as we implement the Environmental Sludge Eradication Strategy.

The Sludge that lingers feeds off the internal guilt people have about the way they should be working, where they should be at certain times of the day, and how they should be letting co-workers know where/when they’re working. We call this “should-ing on yourself.”

Why do we hold on to this “should-ing”?

Because of the years and years of work beliefs that have been drilled into us, it’s very uncomfortable to behave in a way that’s counter-culture. To go grocery shopping on a Tuesday morning goes against everything we’ve learned about how work needs to happen. To leave the office at 2:15 p.m. and not tell anyone is scary to most people. To sleep in and intentionally skip rush hour traffic (and not tell anyone) is very odd.

The internal Sludge of “I should be working right now” or “I should tell someone where I am right now” goes away slowly, but it takes time.

Dream jobs are as elusive as winning lotto numbers. Besides, in today’s economy, just having a job may be your greatest financial asset.

In this exclusive Brand & Strategy interview, Cali Ressler and Jody Thompson, authors of Why Work Sucks and How to Fix It, make the case for a new strategy for managing for results in your organization.

Brand & Strategy: You use the acronym ROWE. What is it?

Ressler and Thompson: ROWE stands for “Results Only Work Environment.”

It’s a strategy that gives employees freedom to work anywhere they want, without the constraints of a work schedule.

Sounds idealistic. What is the most common “Yeah, but…” argument to a ROWE?

“Yeah, but how will we know what our employees are doing in a ROWE?”

This question uncovers what we find in every office environment: No one actually has clear, measurable goals in place. The leaders think they do, but when time is taken away as a measure of employee efficacy, they’re completely lost.

The beautiful thing is that everyone in an office environment feels this pain. The entire environment hungers for clear, measurable goals.

So your vision for job flexibility actually forces organizations to set up measurable goals?

Yes, employees know they have to be able to show what they’ve produced rather than just how much time they’ve put in. Managers know their teams are going to be evaluated on results and results only.

Discussions about goals become two-way: both managers and employees work together to come up with them–and they have to be measurable. Performance discussions happen all the time instead of just being an event every six months or once a year.

How do you measure the success of a ROWE?

The key metrics include productivity, retention, engagement, and business growth.

The first non-profit in the county to migrate to a ROWE, Girl Scouts of San Gorgonio Council, saw improvements in all areas after six months. Key findings included:

• The percent of employees reporting “good” or “great” “work-life balance” increased from 18% pre-ROWE to 93% post-ROWE;
• The percent of employees reporting “good” or “great” “focus when working” increased from 54% pre-ROWE to 95% post-ROWE;
• The percent of employees reporting “good” or “great” “efficiency when working” increased from 54% pre-ROWE to 98% post-ROWE;
• The percent of employees who report that “ROWE makes me less likely to look for another job elsewhere” is 100%; and
• The organization’s voluntary turnover rate decreased from 16.25% to 9.75%, saving the company approximately $25,000 annually.

Are smaller and newer organizations more apt to give the autonomy ROWE promotes?

Ironically, many of these organizations have been started by people who left Corporate America. Without even knowing it, they set up their companies to operate just like the corporate environments from which they came.

We find that smaller organizations have many of the same cultural attributes and beliefs as larger companies: those employees that work long hours are more dedicated; the best relationships are built face-to-face; meetings are the default/best way to get work done; and, work happens in an office building from 8:00 A.M. to 5:00 P.M., Monday through Friday, to name a few.

How has the economy affected organizations’ interest in, or experience of, ROWE?

ROWE has been proven to increase individual and team capacity, therefore dramatically increasing productivity. It’s also been proven to be a sustainable change, unlike other “flavor of the month” approaches that companies institute.

If there was ever a time to step outside your comfort zone and try something new, it’s now. What do you have to lose?

It’s a bank that claims to not be a bank. 

And it doesn’t siphon off its customers’ money with hidden fees and service charges. Instead, ING DIRECT promises to help you save money—at a great interest rate.

In an industry in which “bank” has become a new four-letter word because of the sector’s general disregard for its customers, ING DIRECT has become a stand-out—even likeable—brand.

In an interview with CZ President Dave Goetz, Bruce Philp, principle of Brand Engineering and chief brand architect of ING Direct, and co-author of The Orange Code, identifies what your brand must do to trump the competition:

Brand & Strategy: You wrote, “… don’t dominate the category, subvert it.” How do you do that? 

Bruce Philp: People tend to use the word subversive when they really mean “iconoclastic,” or even just “unconventional.” My definition of subversive is much more orthodox.

Like it or not, when you position a brand, you have to face the brands against which consumers will compare it. In our case, we were going to be compared to the status quo, which would never be a level playing field for our low-cost business model. If the status quo doesn’t support your business concept, then don’t dodge the comparison—undermine it.

Reframe it and cast doubt on it.

Don’t try to fool people into thinking you’re the “best” something. Be the only alternative to a flawed something.

How did that work with ING DIRECT?

We said the last two things you’d ever expect a bank to say: “We’re not a bank,” and “Save your money.” And we said them with such confidence that consumers couldn’t help but challenge their own assumptions about both.

That’s subversive positioning.

You talk about the dangers of boredom when messaging to your audience. What are some signals that it’s time to rethink your advertising strategy?

I think it’s important not to lose sight of what advertising really is. Too many people in our business tend to unconsciously equate it to branding. But of course they aren’t the same thing, and probably haven’t been since, say, the 1970s. Advertising isn’t a brand, it’s a brand asking a consumer to do something.

When we think about boredom or wear-out, we have to think of it in terms of how we’re asking them—not what, and certainly not in what character.

Do you believe that consumers own your brand?

I don’t, even if they seem to say so in focus groups. I think brands exist by the consumer’s grace, but consumers don’t want to own brands any more than, say, they want to govern themselves by plebiscite. They want to be heard, but they don’t want brands to delegate leadership to them.

Left to their own devices, consumers can figure out what a product needs to do, but they’re not going to inspire themselves.

If you leave branding to consumers, you’ll wind up with low margin, commodity businesses. Great brands are like lighthouses, an illuminating beacon that consumers find in the darkness.

How do brands become this “lighthouse”?

“Gut” is really important. By “gut” I don’t mean an ability to predict how people will react to something. I mean the conviction to pursue your agenda as a brand and trust that, if it’s in the best interest of enough consumers, the marketplace will reward you.

It’s guts more than it is a gut instinct.

Apple is a poster child for this notion. Virtually nothing they do is entrepreneurial. Nor is it the product of permission marketing. Nearly all of what they do is the product of a fierce, singular, take-it-or-leave-it vision. I know that not every business can function like that, but it’s amazing how many of the ones we admire the most do.

What are other traits of this brand gutsiness, especially in a down economy?

The brands that seem to be acting like those lighthouses share the following qualities:

• They have not abandoned their purpose. By not dropping their principles like hot potatoes at the first sign of pressure, they have proven they’re authentic at the moment when doing so would have the greatest impact.
• They have reached out to their customers and tried to turn them into a community.
• They have not exploited the anxiety of the times.
• They have concentrated on value.
• They have listened hard to what people are really feeling and put a special effort into being genuinely empathetic.

What is your best positioning advice for senior leaders in universities and other third-sector organizations?

Dare to have a purpose.

In my work with such organizations in the past, I’ve very often seen a stultifying kind of commodity mentality. It’s a product of well-meaning people who believe that they’re betraying their callings if they focus on one constituency or one mission to the exclusion of all others.

The exception to this reluctance is the charitable organization that exists to fight a disease, for example. It’s no coincidence that these are some of the most strongly branded NGOs. They have a singular cause.

By contrast, organizations like industry associations and universities have a pathological fear of taking a stand. They don’t want to leave, as we put it in The Orange Code, “money on the table.” And it’s tragic to see how often they fail, or at least never seem to get anywhere, as a result.

What about those willing to take a stand?

Make a mental list of the most prestigious and superbly branded post-secondary institutions in America. Is there even one brand on that list that isn’t famous for just one or two defining vocations? I bet not.

What makes that a bit mystifying is that when a school decides to promote true excellence in one or two areas and succeeds at it, the entire school becomes more prestigious. Excellence is a reflection of the brand, not the curriculum. Just about any resume is better with Harvard on it—even if it has nothing to do with medicine, law or business.