Corporate America is eating its young

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You can't pick up a newspaper-or, more accurately, scan a Web page-without reading about another ghastly goof in the world of business. Add to that list the horror of watching a parent devouring its brand offspring.

It's dumb. It's disgusting. And now it's become common practice of American business.

Throughout America, the major brands that haven't been starved to death by neglect are slowly being consumed by their own incompetence. Such is the case with General Motors, which recently announced that it would likely kill off some of its most established brands "if sales fail to meet projections." Oldsmobile, with all its brand equity, is already dead. Now Pontiac and Buick face a similar demise.

According to Reuters news service, "GM Vice Chairman Bob Lutz did not specify which car might be dropped, but described Buick and Pontiac as `damaged brands,' and told a Morgan Stanley automotive conference in New York that GM is working to correct that with an array of new vehicles coming to market."

Damaged? Yes. And note Mr. Lutz did not deny that it was the parent that inflicted the damage. He admits GM under-invested in its brands. Actually, it did more than under-invest in them. It starved them to death by failing to lay out or implement clear strategies for each of them.

Nobody knows why Buick exists as a brand, but that's because it is a long time since GM gave anyone a good reason. GM has never understood the sixth law that I preach to clients: "The success of a brand is directly proportional to its ability to bear the mantle of leadership." If you don't lead-if you don't tell people exactly what they should expect from your brand and why-you can't blame them for not following.

Nor has GM seemed to notice how badly it has damaged its relationship with both its retail network-and the public-by offering the largest "sales incentives" in its history. Bribing the public into the showrooms with "cash-back incentives" wasn't enough, and now GM is left in even worse shape than before.

So GM is planning to do to its offspring what every maladjusted, ignorant parent would do to its troubled kids: kill them off.


In the human world, I'm constantly amazed at the number of people who procreate while remaining totally unprepared for parenthood. They give no thought to the trials and tribulations of raising a child. They just have the kid and figure that things will somehow work out. Then reality hits. Yet despite their incompetence the vast majority of parents push forward finding a way to cope. Not so at GM.

But if you think that GM's brand incompetence is an isolated case, think again. Kmart's takeover of Sears is another case of brand murder. Anyone who believes that Kmart acquired Sears for anything other than Sears' catalog of under-valued real estate is in serious denial. For that matter, anyone who hasn't noticed the disappearance of Woolworth's from the planet or Kodak's banishment from the Dow 30 Industrials has simply been asleep at the wheel.

The problem, of course, with these brands, and particularly with GM, is that they end up falling victim to what I call Caretaker Management Syndrome, which has now reached pandemic proportions throughout corporate America. CMS is similar to the theory of Three Generations of Wealth, in which the first generation creates the fortune, the second spends it and the third loses it.

Many American brands are victims of third-generation "caretaker" managers who didn't have to build the brands they manage. Living off the fat of the land, they're too comfortable and too happy to maintain the status quo. They fear innovation and risk and are complacent in that they figure their brand will always be there, because it was always there for their predecessors.

The problem is they run a beast so unimaginably large that it's inconceivable to them that its momentum can stop.

The grandfathers who built the brands knew the power of a brand. They knew how to constantly build and reinforce their value. Caretaker managers, however, tend to spend more time on the golf course than they do building brand value. In fact, most caretakers don't truly understand what a brand is, let alone how to build its value. And so while the caretaker managers might hold hands, close their eyes and wish real hard, their brands continue to wither from neglect.

The plain truth is that America's brands are devouring their young. Sub-brands and line extensions are being spun off or closed down for all the wrong reasons. Despite recent successes, even Procter & Gamble achieved marketing infamy for killing off brands that "don't perform," which more often than not means they don't please accountants whose own lives are measured by fiscal quarters.

I guess this wouldn't bother me so much if I knew that these brands and sub-brands really were to blame for their own failure. But it's the mama and papa brands that are really to blame. Guiding their decisions by balance sheets instead of brand strategy, they completely undermine and undervalue the most powerful asset their companies possess.

Perhaps the worst tragedy of all is that, due to corporate incompetence, the destruction of major brands takes a considerable human toll. As Reuters' report continued: "An elimination of any one of GM's brands would likely mean plant closings and a shrinking of GM's hourly work force. " We're talking about hundreds, maybe thousands of jobs. And that doesn't even touch on the dealers who devoted their entire lives to brands that were once as "solid as a dollar. "

This is the story that American business media continues to miss. The widespread ignorance of branding is a scourge on the economy that's going to get a lot worse before it gets better. Today, General Motors, tomorrow, Levi Strauss. You know, that company that is trying to sell its Dockers brand-but can't find any buyers.

Rob Frankel is the author of the book "The Revenge of Brand X: How to Build Big Time Brand on the Web or Anywhere Else." His blog can be found at

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