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PASSION OR POISON: THE HORROR OF HUBRIS

Brand founders are special. They have great ideas. And, they have passion. They act on their ideas. Brand founders have the code of the brand in their core. It is always worthwhile to spend time listening to their stories, learning from where the brand’s values come, and understanding the brand’s guiding principles. Unfortunately, sometimes a brand founder’s passion becomes arrogance; poison for the health of the brand. Uber is a recent example of passion turning into the poison of arrogance. And, sadly, another recent example is Chipotle.

Recent UBS research indicates that the customer perceptions about Chipotle have fallen enough to merit downgrading Chipotle’s rating from neutral to sell. The research indicates that concerns about food safety are only the tip of the iceberg. Customers indicate that they frequent the brand less not only because of food safety but also because customers perceive the brand as not as clean as it used to be; the food is not as good as it used to be; the service is slower than it used to be; its food is not healthy; and friends do not want to go there with me.  Whether these statements are actually true, perceptions are everything: the hovering food safety issues have tainted customers’ overall brand perceptions. UBS examined Chipotle’s online ratings across various websites: the brand’s online ratings – reflecting customer reviews – have deteriorated substantially.

Chipotle was built on the brand founder’s commitment to sourcing and preparing food according to classical culinary techniques applied to fast food. His passion for Chipotle’s founding principles worked when the brand was small. However, Chipotle has grown to over 2000 restaurants. It now needs to operate differently. Yet, Chipotle did not adapt. Classical cooking does not work for a 2000 restaurant chain. Food safety was a looming risk. The founder’s passion actually prevented the brand from handling an incredibly serious food safety situation where customers in multiple states were becoming ill. The brand founder’s unwavering belief in the food’s provenance and the logistical and culinary processes became stumbling blocks.  The food could not be the problem: the food is organically, naturally, humanely grown, nurtured, handled, and the food is additive-free.

Chipotle’s commitment to classical culinary techniques meant crewmembers had to learn how to properly use knives, and all preparation would be handled in the restaurant, just as in high-end, sit-down, restaurants. Chipotle does not use frozen food. Rice and guacamole are made fresh every day in the restaurant.

The public communications reflected the founder’s hubris. Over the course of the multiple food safety incidents, the brand released numerous press statements that boggled the mind. There was a statement indicating that along with Food with Integrity, Chipotle was now committed to food safety. Did they mean that previously the idea of integrity did not include food safety? Chipotle hired a food safety expert, but there have been no indications that this expert’s recommendations have been followed. In fact, after using a commissary to safely prepare the food the brand’s founder thought the food tasted differently and so the commissary preparation was stopped.  

Chipotle seemed to view the food contamination issue as a small, limited standalone issue. They did not imagine that overall brand imagery perceptions across the brand would be damaged. Contaminated food appears to affect the image of restaurant cleanliness, food taste, and customer service.

Chipotle felt the media treated them unfairly. The incidents were only a very small fraction of the total number of customers served very day. But, the credibility of Chipotle’s promise of “food with integrity” was attacked at its core by these incidents. Playing the situation down will not make it go away.

Advertising can do many things, but it cannot make a restaurant’s food safer. Chipotle tried strange, unconventional adverting. Product safety issues cannot be changed by running a philosophically existential advertising campaign that is probably making Jean Paul Sartre turn over in his grave.

New products did not help change the perceptions of Chipotle either. Chipotle’s queso has been ferociously panned. Commitment to the founding principles of classical culinary techniques does not work for preparing queso as people know it. Chipotle tries a new dessert item. This was destined to fail. People come to a restaurant for its core menu. They are not likely to choose chipotle for a dessert if they do not like the burritos. The dessert entry has been yanked from the stores. And,

Chipotle is not a franchise. Chipotle owns all the restaurants. There was no interest in having outsiders meddling in the brand. As Chipotle grew to over 2000 restaurants, the management of the brand became much more complex. Furthermore, the creation of two other restaurant brands using the Chipotle-style assembly line distracted executives.

Chipotle has experienced tremendous success. The brand changed the fast food landscape. Chipotle leapt to success by leveraging an idea that food can be great and fast. The problem fast food is not that the service was fast; it was the food. Offering quality, sustainably sourced food, made in the restaurant according to classical culinary techniques was something new for the fast food customer. Chipotle’s success created a new business model the industry dubbed fast casual.  

Success needs to be leveraged, not lived off. As brands grow, as the world changes, as customers change, properly managing brands demands changing the way the brand experience is delivered. The essence of the brand’s promise can be kept intact while adapting to changing circumstances.

Chipotle is now looking for a new CEO. As with Uber, Chipotle needs a new leader to put the brand back together. The belief that stubbornly sticking to original techniques supported by unusual advertising would bring back customers and allay their fears was arrogant.

Chipotle is on a downward spiral. Executive hubris will not change this trajectory. Yet, the death of the Chipotle brand is not inevitable. Brands can live forever if they are properly managed.

 

THE CAROUSEL OF CREDIBILITY GRAB THE GOLD BAND OF BELIEVABILITY

What goes around, comes around. From the beginning of advertising, expert testimony was the way to sell a brand. From the remarkable RJ Reynolds cigarette ads that touted that Doctors recommend Camels, to the ADA seal of approval on Crest toothpaste (Look Ma, no cavities!), to Ronald Reagan and GE, to TV star Mariette Hartley selling Polaroid cameras, to today with Marie Osmond and Oprah Winfrey confirming their weight loss results with Nutrisystem and Weight Watchers, respectively.

But, overpowering expert testimony has been the increasing reliance on peer review, peer ratings, and online peer influencers and websites of peers alerting us to situations such as the food safety (alleged) poisonings at Chipotle. Many people do not make a hotel reservation without checking with TripAdvisor, even though faceless, unknowns of potentially sketchy backgrounds are dishing their opinions. They do not make a restaurant choice without checking Yelp. They select a doctor by searching for patient ratings. They select a home-repair person by checking Home Advisor.

Things have changed. The carousel of credibility has turned around with its calliope crooning a new crescendo: experts and academics are now more trusted than peers. The credibility and validity of peer ratings are being questioned.  According to the 2018 Edelman Trust Barometer, just released, 2017 was a good year for faith in experts, and a really bad year for faith in peers. Technical (63%) and academic (61%) experts became the most credible spokespeople relative to “a person like yourself,” which dropped six points to an all-time low of 54%.

In the Edelman press release, the head of the Reputation practice said the following: “In a world where facts are under siege, credentialed sources are proving more important than ever. There are credibility problems for both platforms and sources. People’s trust in them is collapsing, leaving a vacuum and an opportunity for bona fide experts to fill.”

Trust in CEO’s is benefiting. For years, CEO credibility has been on the decline. But as the new study reports, “…this past year saw CEO credibility rise sharply by seven points to 44% after a number of high-profile business leaders voiced their positions on the issues of the day.” In other words, CEOs have moved to standing up for what their brands stand for, a welcome change.

Being the purveyor of credibility has responsibilities. As Edelman points out, “building trust (69%) is now the No. 1 job for CEOs, surpassing producing high-quality products and services (68%).”

Brands must leverage this turn of events. Now is the time to involve expert testimony to enhance brand expertise in the brand’s area of authority. Peer testimony is not going away, but allowing it to totally define and drive the brand is creating a lot of baseless buzz rather than believability.

Brand credibility is a driver of purchase intent. Studies show that the more credible the brand, the higher is the purchase intention toward the brand. Customers show greater purchase intention toward brands that are credible. Research from 2004 indicated that brand credibility could increase the probability of inclusion of a brand in a customer’s consideration set. The years of research on credibility and brand clearly articulate that one of the significant factors in augmenting brand credibility is based on providing expertise.

Credibility means that the brand can be believed to consistently deliver what it promises. The support of “credentialed” individuals is a factor that helps build trust. Credentials means having specific qualifications or checkable achievements as indicators of relevant expertise.

The question for brands has always been “who do you trust?” Brands relied on their heritage, and sometimes the support of experts. But, in the modern social media age, brands relied on the power of peer ratings and comments.

It seems the carousel is spinning around to a new time for trusting the experts over the amateurs. Peer reports and ratings will always be important. But, in a world of information overload, expert testimony will rise in importance. Brands must step out into this brave new world where expertise is the new king. Brands must adopt a new view on how to communicate their expertise as an authoritative source of quality, leadership, and trust.

 

 

 

 

 

 

 

CENTRALIZED MARKETING IS OLD-VIEW MARKETING

Brands that control all marketing through centralized command and control are committing brand suicide. True the world is becoming more global. However it is also becoming more local and more personal at the same time. The challenge is how to market at the intersection of increased globalization, increased localization and increased personalization. Insisting that the center knows best and imposing its will on the world is a formula for failure. Global standardization of marketing was once the accepted dogma. Theodore Levitt, a Harvard professor, popularized global standardization in 1983. With few exceptions, the attempts to create monolithic, standardized brands based on a homogenized view of customers were not effective. The rationale was on reducing marketing costs and not on increasing marketing effectiveness. The simplistic marketing efficiency approaches from the 1980’s are even less relevant today. It is a symptom of organizations that place cost management over brand management.
The global marketing view of the 1980’s was to have one standardized, global brand for a globally standardized product supported by standardized communications to a standardized customer. Establish a centralized marketing structure in the head office and dictate directions to the world. Local satellites existed only to execute the global directives. It was cost efficient. It was very popular. It was wrong.

Professor Levitt fervently believed in global homogeneity that would blanket the planet generating power and profitability. However, as efficient as the globalized, centralized, homogenized approach was, it fostered an environment of “lowest common denominator” thinking where ideas are acceptable everywhere, and especially relevant nowhere.

As the 1980’s transitioned into the 1990’s global marketing evolved to make the management of global brands more sensitive to local/regional cultures. Organizations searched for ways in which brand promises could be both globally standardized and locally relevant. The new mantra was “Think Global. Act Local.” (TGAL).

In theory, TGAL was the best way to build, and broaden, global brand appeal in local/regional ways. However, appeal of centricity often prevailed over local marketing relevance. TGAL became just another way to keep the real power at the center. TGAL came to mean that the center was responsible for the important strategic thinking and creativity. Then, the center handed over the thinking and creative template to the regions for execution. The regions were accountable for results but not really responsible for the marketing strategy to produce those results.

The regional marketing management executed the strategy dictated by the center. If a strategy failed, the regions blamed the strategy dictated by the center. It was wrong for the local market. The corporate center would blame the failure on poor local execution.

So what happened? Over time, the tensions between the regions and the center became intense. In the January 28, 2017 issue of The Economist discussed this approach as “decades-old.” Globally centralized, standardized, homogenized marketing is outdated. As the world becomes more global, local and personal, the failure to respect and reflect local wants and needs, centralized marketing is less effective. As The Economist pointed out, “Many industries that tried to globalize seem to work best when national or regional.”

Global brands have to contend with a three-way tug of war: how can a brand maintain its global, standards while reflecting local relevance and complementing personal differentiation? McDonald’s is one of the world’s biggest global brands. Yet, its marketing is becoming increasingly localized and personalized. The menu not only varies from country to country. It also varies from region to region within countries. A global hotel brand can have global safety and cleanliness standards, a common global reservation system, common global brand identification, while localizing the restaurant menu reflecting local culture, and personalizing the guest experience by customizing the in-room bar, the types of pillows and the newspapers you prefer.

Excessive centralization and standardization is yesterday’s marketing approach. Of course, brands must have global standards of coherent brand commonality. But excessive centralization aiming for reduced costs and increased efficiencies is slinking back into a cost-cutting cave that has no relevance for today. It is a formula for failure. 
Fractionalization, personalization, and localization have shattered the comfort of standardization. Globally standardized marketing is an outdated anachronism in today’s business environment.