Another guest post from US writer and editor, Bill Schweber. Companies with solid reputations and well-established customer bases often extend their reach into associated areas, to grow their market and revenue. This is a sensible way to leverage what they have worked hard to achieve.


But often, there’s an element of deception here as well. Too often, while using their position in one product and market to extend to another market with new products, they quietly pull back on what made them a success in the first place. In short: they hope to leverage themselves while hoping no one notices they are forsaking their original competency.

This is not the same as visibly leaving a market; companies do that all the time, and are up-front about it. For example, about 25 years ago, Intel publicly announced they were ceding the DRAM business to the Japanese (the memory leaders at that time) to focus on microprocessors. Intel made no pretense of remaining a DRAM OEM while secretly starving the business; they were very clear about their abandonment for what they believed would be greener pastures (and it certainly was).

The danger today is that companies think their reputation, brand awareness, and other elements of their market position will have a “long tail”, so they can use it while actually starving it quietly. The hope (or dream) is that it can coast for a while on the momentum of the brand, and that people will not notice there is less and less behind that facade.

Perhaps that was the case decades ago, a time when markets grew, changed, and shrank at a much slower pace; the “time constant” of the audience’s perception of who and what you were was five or even ten years. Now, I estimate that the tail of your solid name is as little as two years.

Just because you are a contender and significant player now doesn’t mean everyone will still perceive you as such in a few years; in fact, hardly anyone may.  As the new generation of customers comes into a market, you have to sell yourself all over again from a near-zero base—except pretty soon, you really haven’t got much left to sell.

Think of all the companies you have dealt with who were major players once but are no more—and not because the business changed, they made mistakes, technologies changed, or similar conventional business reasons.  Instead, they forgot to support their core offerings, and thought they could “get away” on the cheap in both existing and new areas by using their name alone (in consumer products, this is often done by licensing your brand to others).

Look at industry history for an example: RCA (Radio Corporation of America). In the mid-20th century, RCA dominated the electronics industry in ways we can’t imagine now. They designed and manufactured products in their own factories, they made many of the components that went into those products, they had a huge patent and IP portfolio, and they did R&D on every aspect of electronics.

Even more dramatic, they spent $1 billion of their own money in 1960’s dollars (perhaps over $10b+ today) to create color TV: theory, technology, components, manufacturing plants, broadcast facilities, everything. It was like the Apollo moon effort, but for a consumer product and industry. To top it off, they had a name and logo: the dog Nipper, listening to “his master’s voice” on the Victrola, which everyone knew, recognized, and admired.

Then the bright MBAs came in and said: “don’t invest in R&D and production, just live on that rock-solid name alone, and you can even put it on other things, too.”  Over a few years, RCA outsourced production, component development, product design, and basic research, until all that was left was a nameplate to slap on someone else’s products (even car rentals and carpeting). In effect, they dealt themselves out of the game while deluding themselves that they could fool others into thinking they were still players. So where is RCA now? They are just another bland, nearly meaningless brand in the Thomson (aka Technicolor) stable.

The reality is that legacy and reputation don’t last long in today’s world.  If you don’t work to genuinely maintain and refresh them, they’ll dissipate faster than you think. You may have worked hard to build them, but that’s irrelevant to both old and new customers and audiences. They want to know what you are doing now, beyond coasting on your past glories while promising them new and better products and services.