Tendency 1: The Arrogance of (Great) Success
The Six Rules of Brand Revitalization presents an intensely practical blueprint for resurrecting or revitalizing any brand, and driving it to unprecedented levels of success. In this sample chapter they demonstrate how, for some, nothing fuels arrogance more than success.
Nothing succeeds like success.9 In business, there is the adulation of analysts and the praise in the press. There is celebrity and spotlight. There is hero worship, as happened with Carlos Ghosn (he even became a superhero in a Japanese comic book) as he revived Nissan, or Steve Jobs and Howard Schultz as they came back to rejuvenate their sagging brands. Gordon Bethune at Continental, Lou Gerstner at IBM, Steve Kaufman at Arrow Electronics, Cheryl Bachelder at Popeye’s, and others have succeeded magnificently in reshaping sagging brands.
Success is everybody’s aim; no one aims to lose. However, for some, nothing fuels arrogance more than success. It may foster an environment of “I can do no wrong.” Arrogance is at the core of the mind-set defined as “we will sell what we know how to make” rather than focusing on the customer-focused mind-set “we will promise and deliver what customers want.”
As Jim Collins, the management and leadership guru, wrote in 2009 after studying success and failure, “When an enterprise becomes successful, it can cover up a lot of sins. It is not success that makes you vulnerable, it is when you respond to that success with arrogance.” He related arrogance to hubris, the great downfall within the Greek tragedies. In an interview with The South Africa Star, Mr. Collins quoted a Classics professor’s definition of hubris, the ruin of many in Greek tragedies: that is, “an outrageous arrogance that inflicts suffering upon the innocent.” In contrast, Collins found that all the leaders he discussed in Good to Great displayed a common trait: a genuine humility about their success that Collins saw as “the real antithesis of arrogance.”10
Many of the brands we mentioned at the beginning of this chapter had tremendous success over many decades. Or the brand leapt to success by leveraging an idea or taking a risk or both. Success needs to be leveraged, not lived off of. Properly managing brands means managing for continuing success. It means always taking the brand to the next level. There is no inevitable brand life cycle if you are willing to invest in the brand with new ideas and strategies. Brands can live forever if they are properly managed.
At McDonald’s, there were several successes between 2002 and 2005. Some of these were product launches, such as Chicken Caesar Salad. Others were policy issues, such as the three-tier pricing policy. Still others were the global launch of a new advertising campaign (i’m lovin’ it) simultaneously in more than 100 countries. Some were alignment-focused, when we galvanized more than one million employees worldwide. Others focused on how we worked with our agency partners under the aegis of “good ideas do not care where they come from.” And the brand had success with a new business model of “being better, not just bigger,” focusing first on improving the guest experience rather than merely opening new stores. With a clearly defined Brand Promise and global occasion-based needs segmentation, each success was part of making a great brand greater by being better at everything the brand did.
The McDonald’s successes were exhilarating. But Jim Cantalupo and Charlie Bell never became arrogant. They were amazing leaders. The publicity, the kudos, the rising share price, the increasing same store sales, and the positive performance scores in tracking studies were all part of turning around the McDonald’s brand. Above all, Cantalupo and Bell never fostered internal, organizational arrogance that could have turned success into corporate complacency. McDonald’s could always do better. Continuous improvement was a fact of life. (See Tendency 2.)
In 1991, Pepsi CEO Wayne D. Calloway stated that arrogance was the single biggest reason people did not succeed at Pepsi. “He said that there is nothing wrong with having confidence, but arrogance is something else. Arrogance is the illegitimate child of confidence and pride. Arrogance is the idea that not only can you never miss [shooting] a duck, but no one else can ever hit one.” He said, “Arrogance is an insurmountable roadblock to success in a business where the ‘team’ is what counts. The flipside of arrogance is team-work—the ability to shine, to star, while working within the group.”11
Mr. Calloway’s viewpoint is not dated or passé. Just recently, Warren Buffet referred to business arrogance in his Berkshire Hathaway Annual Report letter to shareholders (March 2015). He said, “It was arrogance, more than any other factor, that caused the banking crisis. In any area of life, arrogance is a damaging character defect, undermining interpersonal relationships, but in business it’s potentially lethal. A CEO who is arrogant will ignore the advice of colleagues who may have a far better insight into risks threatening the company. That leads to bad decision-making, low corporate morale and loss of contact between senior management and employees. It destroys the culture of collegiality, of shared opinions and objectives that is crucial to the effective functioning of any organization. Once a CEO becomes isolated in a boardroom he has lost his ability to lead the company effectively.”12
Arrogance is bad for business and bad for brands. Why? Because how you manage your brands is how you manage your business. When the CEOs of the Detroit automotive industry flew down to Washington, D.C., Senate hearings on private jets and then asked for money (except Ford) to sustain their businesses, that was arrogance. Their stance affected their car brands’ perceptions as well as the perceptions of the brand Detroit and the brand “cars made in America.” When the CEOs of the U.S. cigarette brands stood in front of Congress and swore their brands were safe to use, even in the face of decades of data beginning with a landmark Surgeon General’s Report in 1964, that was arrogance. Thinking that consumers will continue to buy your brands because you know best is arrogance.
Kellogg has held onto the idea that consumers will continue to “wake up” each morning by eating a bowl of sugared grains even though the share of American breakfasts that contain sugared-grain cold cereal has dropped to below 30%. And this does not include the figures on Pop-Tarts (white flour and sugar) and Eggo waffles (just plain white flour over which we pour Maple Syrup or some other sugar).13
It has now become automotive lore, but Ford turned down the “minivan” because the company firmly...and arrogantly...believed its station wagons were the answer for suburbanites. Suburbanites would keep driving what Ford knew how to profitably make. The Ford thinking was that people would continue to buy what the company made rather than what they needed. Ford-exiled executive, Lee Iacocca, and his newly installed team at Chrysler, in need of a new idea, produced the minivan. The rest is history.
Harley Davidson had a crisis of “success arrogance” in the 1980s. Vaughn Beals and a group of Harley managers soon purchased the company. Beals and his team turned the brand around. But they felt that the organization was flush with the hubris of success. Employees believed that Harley “had won” and nothing else had to be done. Consultant Lee Ozley joined the team to create a plan for culture change. As Ozley said, “There was this arrogance that we won, that we beat Japan. The organization had begun to revert to the very same behavior that got Harley into trouble.”14
(Recently there have been stories about Zappos and its new organizational approach called Holacracy. Whether good or bad, the new approach focuses on how not to create management by arrogance. When no one has a title and everyone is working in groups collaboratively, being arrogant is not appreciated or rewarded.)
Another example of great brand success driving great brand arrogance followed by brand recovery is Intel. By 1994, Intel had accomplished what most pundits, marketers, analysts, and tech-types thought unnecessary and impossible: they branded a computer chip. The branding efforts were so good that most consumers looked for computers with Intel Inside even if they did not know what an Intel computer chip did while inside. That success created a climate of arrogance that exploded with brand-damaging proportions. The Pentium chip had some serious faults. When requests for refunds and recalls were made, Intel’s public and private response was snappish and self-protective. “It appeared that we at Intel were arrogant, we were telling customers what was good for them. Maybe we have been thickheaded...but we finally figured it out,” said then-CEO Andrew Grove in a reflection of the incident. Once the leadership realized their arrogance was affecting the brand’s image, they recanted and ran a full-page ad in newspapers apologizing.15
Avoiding arrogance takes character and effort on the part of leaders. It is a test of true great leadership to fight the inclination of focusing on oneself rather than the brand and its customers. The leader who creates a culture of arrogance by letting success go to the head and ego is a leader who is more committed to self than to brand.
1 Pittsburgh Business News, July 2, 2015.
2 Berfield, Susan and Noah Buhayar, “Things Are About to Get Ugly at Kraft,” Bloomberg Businessweek, August 24–30, 2015.
3 Leonard, Devin, “Bad News in Cereal City: Will Kellogg Ever Catch a Break?” Bloomberg Businessweek, March 2–8, 2015; Silverman, Gary, “Craft Versus Kraft: Big US Food Groups Have Missed a Major Shift in the Nation’s Tastebuds as Customers Seek Fresher Fare and More Exotic Flavours. Can the Companies Find New Bliss Points to Woo Them Back?” Financial Times, March 17, 2105; “Slimming Down: America’s Processed Food Makers Are Having to Adapt to Declining Popularity,” The Economist, May 2, 2015; Gasparro, Annie, “Kellogg Chases Changing Consumer: Revenue Falls 5% Amid Stronger Dollar, While Profit Tumbles 44% on Cost-Cutting Moves,” The Wall Street Journal, May 6, 2015; Gasparro, Annie, “Indigestion Hits Food Giants,” The Wall Street Journal, February 13, 2015.
4 Byron, Ellen, Serena Ng, and Joann S. Lublin, “Lafley to Hand Over Reins at P&G,” The Wall Street Journal, July 28, 2015.
5 Goel, Vindu, “At Twitter, Slow Growth in New Users Disappoints,” The New York Times, July 29, 2015.
6 Koh, Yoree, “Twitter Ad Woes Subside, but Growth Stalls,” The Wall Street Journal, July 29, 2015.
7 Overheard Column, The Wall Street Journal, October 26, 2015.
8 McKinnon, Judy, and Julie Jargon, “Burger King Owner Touts Sales,” The Wall Street Journal, July 28, 2015.