One must contemplate the distinction between branding and rebranding. Rebranding is often miscast as an exercise in repairing one’s reputation. Some rebranding efforts focus on mitigating a negative image (such as Philip Morris’s name change to Altria or AIG’s move of their advisory business to Sagepoint). Yet rebranding may also represent subtle changes in positioning, or the recasting of visual identify, such as Starbucks recent move to a more contemporary look.

If you’re thinking about rebranding your company, bear in the mind the following considerations:

Seek out simplification-Today’s rebranding efforts are often a function of providing clarity to the marketplace and removing brand confusion. Citi’s recent rebranding removed a single word (if the word bank is in your name, it may not be a bad idea to remove it). Our cluttered market values simplicity.

Leverage Social Media from the ground up- Within our firm, we recently rebuilt our website, refreshed our brand, and printed new business cards (including a QR code). All of our marketing includes embedded social media components, with the intent of driving traffic to our website where prospects can experience various multimedia tools that are featured online.

Use emotional triggers-Google famous Parisian Love ad (when an American finds love in Paris) is a classic example of using emotional messaging to capture the imagination of your audience. All marketing should utilize emotional triggers.

Enter new markets- Pabst Blue Ribbon, perceived as an also-ran in the U.S. rebranded in China as an ultra-premium American lager (PBR) and is selling for upwards of $44 a bottle (the Chinese may not have everything figured out).

Reshape perceptions about quality-Rebranding should not appear cosmetic or contrived. Harley Davidson’s slide in perceived quality in the 80’s was magnified by stiff competition from Japanese competitors.  The company’s drastic repositioning included a return to its core products and the formation of the Harley Owners Group (HOG’s),  which reestablished Harley a bad boy brand.

Identify unmet needs- Your offer may need to change as the utility of your product or the benefits that differentiate it may shift over time.  Marketers will often use a tag line when they wish to preserve their brand equity, and point out new features or benefits.

Use professionals- Rebranding can back fire when companies draw attention to their marketing.  Many smaller companies try to utilize self service template web sites and similar home grown tools that come off as……home grown. Marketing requires constant investment. Hire people who can assist you with both messaging and technology.

Understand the hard and soft costs- Change can be expensive, given the need to reprint, re-sign, change email addresses, etc. Consider all your hard and soft costs (including management team band) with as you refresh your brand.

Organizations often under appreciate the importance of branding. In this world of hyper-competition, the way you communicate the nuances of your brand are more important than ever.

I just recently wrote in this space about the housing market’s affect on our broader economy. It appears as if real estate is the Pareto principle at work. Five states (Arizona, California, Florida, Michigan and Nevada) have generated a shocking 46% of the nation’s foreclosures[i].

While there are a number of forces as work, there is one explicit predictor of foreclosure activity. States where judges must approve foreclosures in writing have 260% more activity than in other states.  As homeowners and banks wait for the government to take action, markets spiral downward, only diminishing the value of properties that have positive equity.

In the states where foreclosures are dealt with quickly, the market has already begun to turn.  Each of us can reach our own conclusions about the role of government (this is not the appropriate venue for such a debate).

The broader point is that the U.S. real estate market, like many other markets has vast regional differences and elements within it moving in different directions.  The concept of the “business cycle” is a bit of a misnomer. Traditional cycles have been disrupted and replaced with a series of variables that drive markets very quickly, sometimes without pretense or warning.

The events that created the recent housing bubble created the perfect storm.  The recovery will be another type of storm, with regions and even areas within regions recovering more quickly than others. We see similar phenomena in employment and growth in various industries.

It used to be that selecting the right industry was enough to ensure some level or prosperity. Today, entrepreneurs and investors need to find very specific opportunities and niches where growth and profit are plausible.

Like everything else, choose your real estate carefully.

Globalization has enabled unprecedented hyper-competition, and all types of dynamic comparative pricing models. Yet pricing within many segments of our economy appear like something from the The Stone Age.

If you go into a white tablecloth restaurant and order the sea bass on a Wednesday, you might pay $30.  If you return to the same restaurant on a Saturday the price would be the same, even though demand in the restaurant is likely to be very different.  Eateries price on the cost plus model built in the industrial age; the price is based on some multiple of raw materials (or labor).

Our economy doesn’t work this way anymore.  Consider the market for sports tickets. Sports franchises (the Lakers for example) set the initial price for a ticket. But the market resets the price in real time based on supply and demand. If it is a Tuesday night game against the Raptors, a seat may command a few dollars more than the face value.  A Sunday game against the Celtics could command double that within a market being energized by the likes of Stubhub and other online exchanges.

Variable pricing based on nuanced supply and demand is the future, and it is the present.  Marriott has historically been the most profitable hospitality company, as its revenue per available room (the industry benchmark) often exceeds that of rivals. In the case of hotel rooms (or airfares), business-to-consumer pricing models can shift daily based on numerous variables such as weather, events, or the calendar.  Like it or not, exchanges that provide comparative prices are proliferating, in both B2C and B2B.

I am not advocating the companies participate in such portals: they the fastest way to commoditize an industry. What I am saying is that the acceptance of such tools points out a broader problem (or opportunity), that markets re-price based on real demand, not arbitrary prices set by the seller.

Businesses, including those that market products and services business-to-business will need to be more analytical about which products and services could and should command higher prices and which will command less.  To set up a fixed pricing schedule seems overly convenient in a world where buyers have far more sensitivity over some purchases than others.  A software developer may need to sell a project at a low cost to win the business, but could charge far more (on an hourly basis) for change orders that are not foreseen by the client.

Most small and mid-market companies have not done enough research to understand the relationships between the products and services they sell.  If an accounting practice sells tax work and audit services, how should they price one against the other and what is the likelihood that clients will gravitate to them as a result of their pricing model or other variables? I think few really know.

Companies should test various pricing strategies to see what works best, and be more purposeful about tweaking pricing to reflect current demand.

And now for my very favorite quote of the year, offered by Nissan CEO Carlos Ghosn.  In reference to the Nissan Leaf, a zero emission vehicle, Ghosn said “this is the future, and everything else is going to look obsolete, like sending messages with pigeons”[i].

As Gnosh put it in an interview in Fast Company, “if you already have an emissions problem with 700 Million cars, what problems are you going to have with 2 Billion?”. In the case of Nissan, Ghosn is looking beyond the defined needs of customers and is anticipating the needs of the global market in a decade or more. It is not good enough to solve problems we can see, the strategist must seek to solve problems that are not readily apparent. To consider such scenarios, strategists must consider Social, Technological, Economic, Ecological and Political trends and consider how various combinations may change the landscape of an industry.

In my book and blog“ Intended Consequences”, I predicted remarkably volatile prices for fuel and the potential for oil to reach prices of far north of $100 a barrel. The predication which became an eventuality was based on an evaluation of “converging factors”, independent trends that combine to create a tipping point. The automobile industry is on the cusp of such a fundamental shift. Toyota has been selling the Prius since, 1997 but the initial curve for adoption was remarkably slow. What we see in evidence today are converging trends that will provide the impetus to create disruptive change in the form of rapid adoption of alternative vehicles:

Political: The U.S. government’s recent announcement of an agreement with thirteen automakers that will reset the Café fuel economy standards to require an average of 54.5 miles per gallon by 2025.[ii] The willingness of OEM’s (original equipment manufacturers), to work with the government in a race to dramatically improve fuel efficiency illustrates their understanding of radical changes in their operating environment.

Social: Shifting sensibilities towards sustainability will drive adoption. Electric cars are somewhat impractical for working people who may not have time to charge them (up to 8 hours) providing a leg up to hybrids.

Technology: The new Prius plug in will offer up to 87 miles to the gallon illustrating explosive improvement in battery technology. Many of the world’s top scientists are working on batteries that could expediently improve performance, size and cost.

Ecological: In Nissan’s case,  the rapid growth of highly polluted Asian markets is viewed as a driver for future demand. Recent disasters in the gulf and elsewhere have heightened awareness of the risks of oil exploration.

Economic: Americans are still fearful of OPEC’s influence and the ability of the cartel to manage worldwide oil prices. As battery prices decline, the value proposition of hybrids will only continue to improve, and the total cost of ownership for such vehicles will be drastically reduced.

Businesses are well advised to review such variables as to develop scenarios about their industry. It may not be possible to look into a magical crystal ball to predict the future, but careful study of trends provides us context on what products and services to develop in order to create disruption.

Everybody likes to think of themselves as a strategic thinker.  From advisory board members, to CPA’s and marketing consultants, lots of people list “strategic planning” within their list of competencies. Yet, there is a big difference between thinking broadly about strategy and creating a functional, tangible, strategic plan.

Strategy is somewhat esoteric, and theoretical. It deals with broad decisions that must be made about a business such as what products to offer; in which markets, using which core capabilities. The carefully crafted strategic plan has tactics woven into it, in the form of goals, objectives, initiatives, and action plans.

Unfortunately, some companies have a strategy and no strategic plan (and vice versa). If the strategy is stored solely within the confines of the thinking of the entrepreneur, there is no strategic plan.

There are books written about preparing a strategic plan in an hour and writing a marketing plan out on the back of a napkin. The napkin’s evil cousin is the one page business plan, which may tout simplicity as grand, but lacks depth, scope and detail. As the thinking goes, anything as important as the future of a business (and the implications for its employees and investors) should be explained in a few paragraphs. Using the same mindset, an airline pilot’s flight plan could be drawn on a napkin.  A cancer researcher’s thesis should be able to fit on an index card. Perhaps we can cut a few corners and keep the design of that skyscraper to a minimum. Who has the time?

The other problem with the napkin analogy is that it suggests two guys sitting in a pub dreaming up the grand strategy over a Guinness. Some of history’s most ingenious strategies may have been dreamed up that way. Yet the grand strategies do not always translate into a functional strategic plan based on research, thought, prodding, challenge and development of core capabilities such as supporting human capital and technology.

Most importantly, the people who will be responsible for buying into the grand scheme need to be included in the process of developing it. If a board of advisors or two guys in a bar craft and develop the strategy void of management’s input, they are likely to sabotage it or at least slow down its momentum.

Thus, the distinction between being a closet strategist and creating a thorough strategic plan is an important one.  The finer things in life, like a great cabernet or scotch, take time. Building a strategic plan requires patience and a level of expertise that you would expect out of a CPA or intellectual capital attorney.

Take the time to convert your strategy into a tangible strategic plan that you can share with your investors, employees, vendors and even customers (when appropriate). Isn’t the future of your company worth it?

I recently had a conversation with a CEO who was lamenting about the disparity between public company valuations and those of privately held concerns. As of July 2011, the S&P is trading at a multiple of 14, while private company multiples remain in the 5-6 range. Investors value public company access to capital, and scalability into large consumer markets.  Of the Top 10 U.S. companies by size, none are pure play B2B companies.

Small companies come in all forms; some compete with larger branded companies, and some market directly to them.  In the age of confluence, some do both. How can small companies survive in a land of giants?

The primary difference between Fortune 1000 companies and smaller ones is more fundamental than which markets they serve. Intel founder Geoffrey Moore makes a distinction about business architecture – the difference between “complex systems” and “volume operations”[i].

Many smaller B2B companies are built to support specialized and custom solutions, while most Fortune 500 companies are built from the ground up to serve the masses. While customization may command higher prices (per transaction) than generalization, high volume companies cross a threshold where their infrastructure promotes a lower cost per unit and the experience curve takes full affect. Thus, B2B companies face an inherent profitability disadvantage.

Where Microsoft offers its highly useful suite of Office products at around $400 per license, Apple’s B2C model (which is often utilized by small businesses and micro-businesses such as designers and the like) offers Pages and Numbers at $9.99 each. One offer is based on high intellectual capital value and the other on mass appeal and ease of use.

For smaller B2B companies to reach new levels of profitability, requires they find a path to scalability. Of course not every business wants to be big. Some entrepreneurs prefer a “family culture” and more tempered growth (with less risk).

One way to effect profitable volume is to find a balance, where products and services are “mass customized”. Mass customization is all the rage in consumer products where individuals can even build their own handbags and Nike basketball shoes to their specifications.

Smaller companies (B2B and B2C alike) should seek out solutions that allow for better utilization of existing solutions across more customers. In other words, the provider should not need to reinvent the wheel with each project. Often, optimizing margin requires leverage of a base product or service that can be replicated, at times with features configured to the customer’s individual needs. To configure from a menu of choices is considerably different than satisfying each specific whim, which may offer greater intimacy with the customer, but may also require the business to sacrifice profit. For every feature created for an individual customer, there is a resulting opportunity cost (time, money and energy that could be invested elsewhere).

The other requirement for getting big is a shift towards systems thinking, where management teams make decisions within the framework of their company’s capabilities. For a new initiative to succeed requires careful analysis of the resources required to implement it. The key for smaller companies who aspire to do business with larger ones it to utilize systems and processes consistent with the expectations of the customers they serve.

Competing against larger companies requires a unique mindset. Often small businesses use concepts like judo (where the larger opponents energy is often used against him) to beat the larger foe at the point of attack. Consider the depth and width of the market you want to serve, and scale your resources accordingly.

A common theme in recent years is the thirst to diversify. Often organizations wish to minimize customer concentration risk, or seek out new markets with less competition.

Competition is a matter of degrees, and one can predict which markets will attract competitors based on the ease by which they can enter or exit. While there are industry specific hurdles to consider in any business, barriers to entry include:*

Economies of Scale- Companies seek out volume or vertical integration in an effort to control raw materials or create a cost advantage.

Capital Requirements- The need for access to heavy equipment, factories, or labor is so expensive to fund that only large competitors enter the fray.

Switching Costs- The cost for customers to switch suppliers becomes too high.  When one takes on a new cell phone contract, the price penalty to switch is punitive. By the end of the contract, when switching costs are low, providers offer incentives to keep customers in their network.

Access to Distribution- Companies such as Coke, Pepsi, Nabisco and Frito Lay control distribution at retail outlets, keeping competitors off the shelf. Once distribution is established, it is relatively easy to expand into new categories such as bottled water and iced tea.

Cost Advantages- In some instances cost advantages have nothing to do with scale, but are a function of strategic alliances or bets that provide cost savings.  During the last run up of fuel prices, Southwest Airlines’ clever hedge only expanded their cost advantage.

Government Policy- Government is unpredictable and is an X factor in many businesses. Government contracts often exclude suppliers who cannot meet or choose not comply with a myriad of requirements from eco standards, to minimum labor rates.

When analyzing which business you should be “in”, it is not enough to consider the current state of competition. How might competitors behave in the future?  Is the market large enough to attract behemoth companies?  How have such companies reacted to price competition in other markets?

Another consideration is the cost of exit. Companies who provide parts may have legacy costs that may last many years and erode profits. There are many variables to consider in any new endeavor, and diversification offers both opportunities and a myriad of risks.

*Adapted from Competitive Strategy by Michael Porter

This week, I want to expound on a series of unrelated events shaping our world:

Last year, a deluge of rain in Australia and Canada, and drought in Argentina and Russia sparked a worldwide rise in food prices.  On Dec. 17^th, after months of poor supply, Tunisian produce vendor Mohammed Bouazizi was mugged by police and then set himself on fire in protest.  Reaction to his plight set off a revolt in the Middle East. Beyond the radar to us overly indulgent Americans is that the world is on the verge of a global food shortage.

Ironically, the U.S. growers have reaped the rewards of higher prices for U.S crops and futures contracts. Wheat prices were up as much as 74%, (corn 87%[i]) and net farm income is up 20% this year. Demand is rising for dairy, meat and poultry to support a burgeoning global middle class.[ii] Spring planting of key crops will dictate food prices later in 2011 but farmers may be hesitant to plant in a period of high fuel and fertilizer costs.

While unrest continues throughout the Middle East, social states who provide strong entitlements such as UAB, Kuwait and Oman will likely not be threatened. Similar protests in oil rich Iran or Iraq would be more unsettling to world markets.

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As Motorola revealed its Xoom tablet this week, the Microsoft vs. Apple war took on a new dimension. The real war may be tablet vs. PC as a new generation of devices operating on Honeycomb-Android (Google) and other operating systems hit the market[iii].  Electronics makers are currently developing over 100 designs of new models, many of which sport more business friendly applications.

The second generation of iPads has been somewhat under wraps but is expected to be lighter, faster and include a camera and video conferencing capabilities. Apple’s advantage is its burgeoning iTunes and App Exchange platform.  Apple only spends about 7% of revenue on R&D, about half of what Google and Microsoft[iv] spend, providing a significant competitive advantage. I was in a meeting last week with 7 other people; everyone had a tablet.

Meanwhile, Microsoft (Office 365) and others are developing new Small Business Enterprise applications to better leverage the combination of mobile devices and low cost cloud computing options. The paradigm shift to storing all documents on the internet is emerging as a revolution coined as “cloud productivity.”

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Cisco’s new “telepresense” conferencing systems are all the rage, providing a far more realistic teleconference then the 1^st generation systems. With concerns over fuel costs and the environment, more companies may be moving towards adopting such technologies.

If you want to see an amazing video on future technologies, see “A Day Made of Glass…Made Possible by Corning” on YouTube.

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It is expected that the U.S. post office will eliminate Saturday delivery by the end of 2012.

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It is “hurry up and wait” for small businesses looking to minimize their insurance costs.  The health care bill requires that each state set up “health care exchanges” by 2014[v]. Most states are dragging their feet, and waiting to see what legal challenges emerge.  California has already pushed through legislation but other states are dragging behind.

It is expected that “exchanges” once enacted may actually bring about market conditions that will lower costs for small groups (in the neighborhood of 50 lives)  who will be better able to leverage buying power and have more predictable premiums. Let us pray.

[ii] The Kiplinger Letter Vol 88 No.

[iii] Motorola’s Xoom Starts Tablet Wars by Walter Mossberg WSJ 2/24/11

[iv] Mobile Wars Bloomberg Business Week 2/21/11

[v] The Kiplinger Letter Vol. 88, No. 7