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Colin Powell on ones position

“Avoid having your ego so close to your position that when your position falls, your ego goes with it.”

That must explain why the father of positioning, Al Ries, holds on so tightly to his outmoded business concepts.  For example, in his latest Ad Age column, "CONTEMPLATING THE SORRY STATE OF GENERAL MOTORS: Will They Ever Figure Out How to Fix Their Brands?," Ries advises GM:

• Hummer: Scrap the brand. Hummer sales last year represented only 1.3% of GM's unit volume. A company GM’s size shouldn’t be marketing niche vehicles.
• Saab: Scrap the brand. Saab sales last year represented less than 1% of GM's unit volume.

He closes the article by advising GM to: "Fix the brands first. Then fix the company."

Huh? C'mon Al. Fix the brands, then the company?  They're one and the same thing. And what's a niche Al?  A niche is a special place within the scheme of things.  Here's how Wikipedia describes niche marketing:

Niche marketing is the process of finding and serving small but potentially profitable market segments and designing custom-made products or services for them. For big companies those market segments are often too small in order to serve them profitably as they often lack economies of scale. Niche marketers are often reliant on the loyalty business model to maintain a profitable volume of sales.

Don't get rid of these special, profitable places in people's hearts. Create even more!  Al, this is the age of the niche. I'm sure he was overjoyed when Coke decided to scrap Diet Vanilla Coke.  Not me.  I switched to Pepsi (who, by the way, is kicking Coke's brand youknowwhat): See this recent Fortune Magazine article, "The Pepsi Machine: Sales are soaring, margins are up, and investors are cheering. How Pepsi outmaneuvered Coke by looking beyond the cola wars."

Note: Here's one revealing piece of information from the article that is a perfect account of business insanity:

"Would you believe that GM in the past decade spent $32.9 billion on advertising in the American market? Considering that the automaker had a recent market capitalization of $10.9 billion, the past decade of GM advertising cost more than three times the value of the entire company. Despite that, GM's domestic market share continues to decline, from a 1962 high of 51.9% of the market to last year’s 26.2%. (Its market share has declined 30 of the last 43 years.)."

I know far too many people like Al and the GM executives who should strongly consider Dee Hock's observation:

“The problem is never how to get new, innovative thoughts into your mind, but how to get old ones out.”

I wonder what Al, and the others, would have to say about the recent article "Love Your Dogs" from Strategy + Business. Here's an excerpt:

Conventional wisdom dictates that businesses invest in their best performing units, and sell, shutter, or siphon off resources from their worst performers. But what if the conventional thinking is wrong? Leading behavioral economists now believe that investing in your "dogs," or poor performing units, could bring far better returns than investing in your "stars," or best performing units. It's a counterintuitive strategy that could lead to unconventional success.

Things just continue to get more and more interesting, don't they? Enjoy your weekend. I'm off to meet my Italian friend Lou to grab a pint of Guinness.

Posted March 16, 2006
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