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THE NUMBER-ONE strategy of HIGH-PERFORMANCE BRANDS

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A whiteboard overview by Marty Neumeier

ZAG
THE NUMBER-ONE strate gy o f HIGH-PERFO RMANCE BRANDS
a whiteboard overview by marty neum eier
Copyright 2007 by Marty Neumeier
New Riders is an imprint of Peachpit Press, a division of Pearson Education
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ISBN 0-321-42677-0
987654321

New Riders
1249 Eighth Street, Berkeley, CA 94710

510/524-2178

Printed and bound in the United States of America

800/283-9444

510/524-2221 (fax)

TO MOM AND DAD, MY BOOKENDS

Preface

As the pace of business quickens and the number

of brands multiplies, its customers, not companies,
who decide which brands live and which ones die.
An overabundance of look-alike products and
me-too services is forcing customers to search for
something, anything, to help them separate the
winners from the clutter.
The solution? When everybody zigs, zag.
Youll find this book a living example of the zag
discipline. While many authors start with an articles
worth of ideas and expand them to book length,
Ive taken a books worth of ideas and compressed
them to article length. Instead of a theorists view
from the outside, Ive given you a practitioners
view from the inside. Instead of 500 pages of
heavy-going case studies, Ive squeezed my
thoughts into less than 200 pages of easy-to-read,
easy-to-use, and easy-to-remember principles.
In short, with ZAG , I preach what I practice.
I know your time is valuable, so my first goal
is to give you a book you can read on a brief
plane ride. My second and more important goal
is to give you the insights, process, and courage
to build a high-performance brand.
Marty Neumeier

Contents

Introduction

THE BIG SPEEDUP 1

THE REAL COMPETITION IS CLUTTER 6
BRAND-TO-BRAND COMBAT 14
THE NEW DEFINITION OF BRAND 19
ROSSER REEVES GOT ONE OUT OF THREE 20
THE TROUBLE WITH ADVERTISING 21
DONT OFFER MOREOFFER DIFFERENT 26

PART 1 : FINDING YOUR ZAG

HIT EM WHERE THEY AINT 33

THE DYNAMICS OF DIFFERENT AND GOOD 34
LOOK FOR THE WHITE SPACE 40
UNCOVER A NEED STATE 41
FIND A PARADE 45

PART 2 : DESIGNING YOUR ZAG

BRAND AS A SYSTEM 47

1. WHO ARE YOU? 49

2. WHAT DO YOU DO? 53

3. WHATS YOUR VISION? 54

4. WHAT WAVE ARE YOU RIDING? 56

5. WHO SHARES THE BRANDSCAPE? 60

6. WHAT MAKES YOU THE ONLY? 65

7. WHAT SHOULD YOU ADD OR SUBTRACT? 72

8. WHO LOVES YOU? 76

9. WHOS THE ENEMY? 81

10. WHAT DO THEY CALL YOU? 82

11. HOW DO YOU EXPLAIN YOURSELF? 88
12. HOW DO YOU SPREAD THE WORD? 91
13. HOW DO PEOPLE ENGAGE WITH YOU? 94
14. WHAT DO THEY EXPERIENCE? 96
15. HOW DO YOU EARN THEIR LOYALTY? 100
16. HOW DO YOU EXTEND YOUR SUCCESS? 104
17. HOW DO YOU PROTECT YOUR PORTFOLIO? 108
PART 3 : RENEWING YOUR ZAG

SCISSORS, PAPER, ROCK 115

THE FOCUS OF SCISSORS 120
THE MOMENTUM OF ROCK 121
THE SIZE OF PAPER 122
HOW STRUCTURE BECOMES STRICTURE 124
UNLOCKING YOUR ZAG 126
WHEN GOOD SHAREHOLDERS GO BAD 130
THE NEW PRIME DIRECTIVE 131
A TWO-STAGE ROCKET 132
ZAGGING AT THE SPEED OF CHANGE 134

THE 17-STEP PROCESS 138

TAKE-HOME LESSONS 144
RECOMMENDED READING 158
ABOUT NEUTRON 168
ACKNOWLEDGMENTS 170
INDEX 172
ABOUT THE AUTHOR 178

BU SINESS

HAS ONLY
TWO BASIC
M AR KETING
FU
AN D INNOVATIONNCTIONS :
PETE R
.
DR UCKE
R

section title

section title

Introduction

THE BIG SPEEDUP.

The starters pistol was fired in 1965 with Gordon

Moores bold prediction: The number of transistors
in a given space would double each year, while
the cost of each transistor would decrease, and
its speed would increase. Forty years later the
spirit of Moores Law still holds, and his company,
Intel, remains at the heart of a revolution in speed
that has altered our lives in ways weve yet to
fully comprehend.
As computing power has grown, so has our
access to information. For example, in 1998 Google
had an index of 25 million pages. By the end of
2004 its index had grown to 8 billion pagesa
360-fold increase. And the speed? When I entered
the search term speed of business, Google
delivered 170 million citations in 0.2 seconds flat.
We now enjoy instant connectivity to our
friends and business associates around the world,
thanks to cell phones, instant messaging, and
e-mail. Were so connected that we risk becoming
disconnected. For example, companies have cited
BlackBerrys under the table as the biggest
obstacle to coherent meetings.

Introduction

Weve learned not only to sneak our e-mails during meetings, but to talk on the phone, listen to
music, read online documents, and converse with
colleagues at the same time. At home we toggle
between reading a magazine and listening to
music, browsing the Web and watching a football
game, cooking a casserole and catching up on
world events. News programs no longer consider
their offerings rich enough unless they cater to
our multitasking habits with a continuous stream
of stock quotes, late-breaking news, weather, and
other items to activate the edges of our screens.
Manufacturers have a need for speed as well.
The winning manufacturer is no longer the one
with the best product, but the one with the fastest supply chain. Author and supply-chain expert
Rob Rodin explains that companies today have
no choice but to connect to the three insatiable
demands of businessfree, perfect, and now.
Helping make the now a reality are broadband
computer networks, overnight delivery, RFID tags,
and just-in-time processes. Manufacturing leaders
such as Dell and Toyota have capitalized on what
sociologist Alvin Toffler had predicted in 1965:

Introduction

As business speeds up, he said, each unit of time

will become more valuable.
A century ago a visit to the store might have
been an all-day trek, while today most of us can
do our shopping right in our neighborhood. In 1986,
before the big speed-up, America had more high
schools than shopping centers. Today, shopping
centers outnumber high schools by two to one.
Inside those shopping centers, supermarkets stock
more than three times the number of products they
did in 1986, and innovations in checkout systems

Introduction

Speed gets under your skin.

Moores Law has unleashed an era of
acceleration in which tiny Identification
chips will play a large part.

section title

are getting customers through the line in less than

half the previous time.
Before Moores Law, Americans were famous
non-travelers, with around three million people
going to Europe each year. Now, thanks to cheaper
fares and a greater choice of airlines and airports,
more than 11 million people go to Europe each
year. Where do they stay? Possibly at one of the
54,000 hotels listed on Expedia.com. By shopping
online they can quickly compare photos, descriptions, and prices, then book their hotels on the spot
with a credit card.
Travel is expanding the borders of our eating
habits as well. After visiting Europe, for example,
we may develop a taste for Belon oysters. A seafood restaurant can then impress us by letting us
know that our entree has been flown in fresh from
Brittany. The oysters sitting on your plate tonight
may have boarded a plane this morning.
McDonalds, the king of fast food, has recently
reduced the average meal-delivery time to 121
seconds. They plan to shave off another 15 seconds by adding an RFID check-out system that
allows customers to pay without even touching
their wallets. Some of us will still be impatient.

Introduction

THE REAL COMPETITION IS CLUTTER.

We not only live in a world of FASTER , we live in

a world of MORE . Traditional marketing strategists
tend to frame the competition in terms of other
offerings in the same category (i.e., other sports
cars). When they think outside the box, they
may even include offerings in tangent categories
(i.e., sporty sedans and motorcycles). But todays
real competitioncompetition thats so pervasive
we cant even see itdoesnt come from direct
or even indirect competitors. It comes from the
extreme clutter of the marketplace.
When John Wannamaker launched the first
department store in 1876, he opened the door
to wider customer choice, and our choices have
been multiplying ever since. By the time Moores
Law was established in 1965, the average supermarket carried 20,000 items. Now we can choose
from among 40,000 items or more. In 2005 alone,
195,000 book titles were published, adding to the
four million already in print. In the same year, 40
billion product-jammed catalogs were published in
the United States, which amounts to 134 catalogs
for every man, woman, and child. In the financial
sector, more transactions were recorded in a

introduction

single day of 2005 than in all of 1965. These

are all examples of PRODUCT CLUTTER .
Each product and service is defined by its
features, which offers more scope for clutter.
We need only compare the features of a 1986
telephone with the features of a 2006 cell phone
to see whats possible when engineers put
their minds to it. This is an example of FEATURE
CLUTTER , which comes from the type of straightline thinking that says more is always better.
With a growing list of features, companies are
naturally more eager to communicate the resulting
benefits. This has led to a reported 3,000 marketing messages per day, per personup from
1,500 at the time of Moores Law. Yet our ability

Marketplace clutter takes 5 forms:

introduction

Product clutter .

Too many products and services.

Feature clutter .

Too many features in each product.

Advertising clutter .

Message clutter .

Media clutter .

Too many media messages.

Too many elements per message.

Too many competing channels.

to pay attention to marketing messages hasnt

grown at all. The number of messages we can
take in, according to The American Association
of Advertising Agencies, is still less than 100 per
day. Not surprisingly, two-thirds of Americans
complain that they feel constantly bombarded
by ADVERTISING CLUTTER .
If we look more closely at the messages themselves, we may find that the problem gets worse.
Research shows that most commercial messages
contain too many elements, all competing with
one another for our understanding. And the elements themselves may be uninteresting, unclear,
or off-message. When CEO s say they know that
half of their advertising money is wastedthey
just dont know which halfit may be the half
thats spent on MESSAGE CLUTTER .
Finally, technology and competition have
resulted in MEDIA CLUTTER . In 1960 there were
8,400 magazine titles, 440 radio stations, and 6
television channels. Today there are 12,000 magazine titles, 13,500 radio stations, and 85 television
channels, as well as 25,000 Internet broadcast
channels that didnt exist before Moores Law.
Back then, television networks competed with

Introduction

other television networks. Today, thanks to our

multi-tasking-speed-obsessed culture, they also
compete for our time against the computer, the
magazine, and the MP3 player.
Despite a 75% increase in advertising, evidence shows were paying less attention to any
given product, service, message, or medium. In
an article titled Complexities of Choice, adwriter
Glory Carlberg offered an explanation: Years ago,
the exponents of good merchandising pointed out
that in giving a choice you made it more difficult
for the prospective buyer to say no. However, it
is just possible that todays range of choices may
so confuse the buyer that he or she will put up
with the old model rather than decide which is
the best of the 23 varieties advertised. She wrote
that article in 1965.
Ironically, when companies are faced with
competition from too many products, services,
features, messages, meanings, or media, their
first reaction is to fight clutter with more clutter.
Its like trying to put out a fire with gasoline.

introduction

10 1

Introduction
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Introduction

2 11

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[ Ahh, ISNT THAT BETTER? ]

BRAND-TO-BRAND COMBAT.

The human mind deals with clutter the best way

it canby blocking most of it out. What gets in,
those items that seem most useful or interesting,
are labeled and stored in little mental boxes. Once
a label goes on and a box is filled, the mind resists
making changes to it. This simple fact has a profound effect on how businesses now compete.
To sustain success, companies have always
needed to erect barriers to competition. At the
beginning of the industrial revolution, for example,
the favored barrier was ownership of the means
of production. If a company had a knitting machine
and its competitors didnt, the company with the
machine usually won.
When most companies had machines, the
barrier to competition became the factory. If a
company could afford to own and manage a large
factory with trained employees and conveyor-belt
efficiencies, the company with the factory won.
Later, when many companies had factories,
the barrier to competition became access to
capital. If a company could raise capital by selling
shares or putting its factory up as collateral, the
company with the capital won.

14

Introduction

As manufacturing began to give way to the information economy, the barrier moved from monetary
capital to intellectual capital. If a company had
patents and copyrights to keep competitors from
reproducing its products and processes, the company with the patents won.
Today, the intellectual capital barrier is showing
cracks. Yesterdays patents are losing their value
as companies leapfrog each other in a constant
race to innovate. Not only that, using intellectual
property as a barrier can sometimes hurt companies rather than help them, since it can slow the
growth of the business ecosystems that allow them
to thrive. An example is Apple Computers early
decision to keep its operating platform closely held
while Microsofts standard platform swept the field.
Now, the battleground is moving again. While
intellectual property, access to capital, and manufacturing efficiencies are still important, the newest
barriers to competition are the mental walls that
customers erect to keep out clutter. For the first
time in history, the most powerful barriers to competition are not controlled by companies, but by
customers. Those little boxes they build in their
minds determine the boundaries of brands.

Introduction

15

FACTORIES

16

CAPITAL

introduction

THE BARRIERS
TO COMPETITION
HAVE MOVED FROM
THE PHYSICAL TO
THE INTELLECTUAL,
and FROM WITHIN THE
COMPANYS CONTROL
TO OUTSIDE it.

PATENTS

introduction

BRANDS

17

A brand is
a persons
gut feeling
about a
product,
service,
or company.

section title

THE NEW DEFINITION OF BRAND.

What exactly is a brand? Hint: Its not a companys

logo or advertising. Those things are controlled
by the company. Instead, a brand is a customers
gut feeling about a product, service, or company.
People create brands to bring order out of clutter.
If the word BRAND didnt exist, wed have to invent
a new one, because no other word captures the
complexity and richness of this concept. The only
word that comes close is reputation. Your personal
reputation, like a companys brand, lies outside
your control. Its not what YOU say it isits what
THEY say it is. The best you can do is influence it.
If a brand is a customers gut feeling, then whats
the definition of branding? Briefly, its a companys
effort to build lasting value by delighting customers.
While the formulas for measuring brand value are
complex, the goal of branding is simple: To delight
customers so that MORE people buy MORE things
for MORE years at a HIGHER price. Branding also has
a karmic side. For example, if a company promises
more than it delivers, its brand will suffer, which will
cause the opposite effect: FEWER people buying
FEWER things for FEWER years at a LOWER price.
Companies serve at the pleasure of their customers.

Introduction

19

ROSSER REEVES GOT ONE OUT OF THREE.

For many years Rosser Reeves worked at the

Ted Bates agency, and in 1961 he wrote a book
called REALITY IN ADVERTISING . In it he urged
advertisers to focus all their communications on
a Unique Selling Proposition, or USP, asserting that
the customer tends to remember just one thing
from an advertisementone strong claim, or one
strong concept. While USP was a powerful idea
in 1961, the only part of his phrase that seems
powerful today is the unique part.
Customers today dont like to be soldthey like
to buy, and they tend to buy in tribes. Better advice
for companies is to focus their communications not
on a USP but on a UBT a Unique Buying Tribe
that has a natural affinity for the companys products or services. In a tribe, news spreads quickly,
which gives brands extra traction.
USP was about PUSHING products and services.
UBT is about PULLING people into a tribe they can
trust. In a marketplace of me-too offerings, people
dont seek features and benefits so much as tribal
identity. If I buy this product, they seem to ask,
what will that make me?

20

INTRODUCTION

THE TROUBLE WITH ADVERTISING.

Traditional advertising is in a death spiral. Media

have splintered into smaller and smaller channels, so that it now costs too much to reach a
large enough audience. But the root causes for
the death spiral are twofold: 1) People dont like
one-way conversations, and 2) People dont trust
advertising. As a result, many are voting with
their feet.
Traditional communication vehicles such as
television commercials work best with intrusive,
one-way selling messages. But since people now
have a choice, theyre choosing to spend more
time on the Web, where communication is more
like a conversation than a sales pitch. Theyre also
listening more to their friends, in a return to the
word-of-mouth culture that existed before mass
communications. Unfortunately, as audiences turn
their backs on intrusiveness, the advertising industry is fighting back with even more intrusiveness.
This is the first reason for advertisings death spiral.
Traditional advertising also works best when
the promise is largelarger than the product or

INTRODUCTION

BY BEING MORE INTRUSIVE

AND HITTING BELOW THE BELT,
TRADITIONAL ADVERTISING
ACHIEVES SHORT-TERM GAINS
AT THE RISK OF LONG-TERM
EFFECTIVENESS.
ADVERTISING

BECOMES LESS
EFFECTIVE

AUDIENCE

INDUSTRY

TUNES OUT IN

CREATES MORE

LONG TERM

INTRUSIVE ADS

AUDIENCE
BUYS IN

SHORT TERM

INTRUSIVENESS
DEATH
SPIRAL
INTRUSIVENESS DEATH
SPIRAL

service can deliverwhich is why people long ago

learned to distrust it. In a 1998 Gallup poll rating
honesty and ethical standards across a range of
professions, advertising people ended up near
the bottom, sandwiched between lawyers and car
salesmen. Today 92% of people skip the commercials on their recorded programs. How has the
industry responded? By hitting further below the
beltsneaking advertising into editorial copy,
television content, movies, and events, all under
the euphemistic heading of product placement.
ADVERTISING

BECOMES LESS
EFFECTIVE

INDUSTRY

DISTRUST

DISGUISES ADS

INCREASES IN

AS CONTENT

LONG TERM

AUDIENCE
BUYS IN

SHORT TERM

22

INTRODUCTION

BELOW-THE-BELT DEATH SPIRAL

This blurring of church and statecontent and

advertisingcombined with exaggerated promises
has created the second reason for advertisings
death spiral.
Will the industry pull out of its tailspin?
BELOW-THE-BELT DEATH SPIRAL
Probably, because advertising people are smart,
and will find ways to reinvent their industry. Will
it still be called advertising? Thats another question. What people want today are trustworthy
brands. What they dont want is more intrusiveness, more empty claims, more clutter.

INTRODUCTION

23

Im a great
Lover.

1. Marketing

Im a great
lover.

Hello

2. telemarketing

Trust me.
Hes a great
lover.

3. public relations

24

Introduction

Im a great lover.
Im a great lover.
Im a great Lover.

4. advertising

5. graphic Design

I understand
youre a great
lover.

6. Branding

introduction

25

DONT OFFER MOREOFFER DIFFERENT.

One day in 2005, the top two stories in THE WALL

STREET JOURNAL were: 1) The U.S. economy
appears to have lost steam, and 2) Apples profit
surges more than sixfold. The message was
crystal clear to any CEO who happened to glance
at the headlines that day: To succeed in a competitive business climate, you have to innovate.
Apples philosophy of Think different may turn
out to be the mantra for 21st century business.
Differentiation, the art of standing out from
the competition, is not front-page news. What
IS front-page news, in a world of extreme clutter,
is that you need more than differentiation. You
need RADICAL differentiation.
The new rule: When everybody zigs, zag.
Traditional differentiation is an uphill battle in
which companies lavish too much effort on too
few competitive advantages: the latest feature, a
new color, a lower price, a higher speed. Radical
differentiation, on the other hand, is about finding a whole new market space you can own and
defend, thereby delivering profits over years
instead of months.

26

INTRODUCTION

Think of radical differentiation as the engine for

a high-performance brand. It gets you on the fast
track to having more people buy more stuff for
more years at a higher price. It creates a strategic filter for questions such as What should we
do? What should we make? Who should we
make it for? Who should we hire? and How
should we behave? With a zag, you can start a
new category that your customers, your employees, your partnerseven your competitorswill
help you build. Without a zag, you could easily
end up in the fossil layers of market clutter.
To deploy radical differentiation, youll need
to master four disciplines:
1. Finding your zag
2. Designing your zag
3. Building your zag
4. Renewing your zag
Ready?

INTRODUCTION

27

BE DIFFERENT.

section title

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NO, REALLY

section title

DIFFERENT.

section title

Part 1 : FINDING YOUR ZAG

HIT EM WHERE THEY AINT.

When I was five, my dad bought me a kid-sized

baseball bat and set out to teach me the great
American game. As he pitched ball after ball, he
served up a steady stream of advice. Bend your
knees. Elbows up. Watch the ball. Step into it.
Level swing. Follow through. But the advice that
comes back to me now is the advice he gave me
later, when I asked him how I could improve my
batting average. He said, Hit em where they aint.
Dad was echoing the words of Wee Willie
Keeler, the smallest man in the history of baseball.
At only 5'4" and 140 pounds, Keeler amassed a
streak of 200-hit seasons that lasted from 1894 to
1902, and after 19 years in the major leagues he
retired with a lifetime batting average of .347. Whats
more, he did it with a bat not much bigger than the
one my father bought me when I was five. How?
He used brains instead of brawn. He learned how
to find the spaces between the fielders.

FINDING YOUR ZAG

2 31

THE DYNAMICS OF DIFFERENT AND GOOD.

For most companies, the problem with radical

differentiation is the radical part. If nobodys
doing it, youd be crazy to do it yourself, right?
Wrong. In fact, if youre looking to become the
leader in a new market space, the rule is just the
opposite. If ANYBODYS doing it, youd be crazy
to do it yourself. You cant be a leader by following
the leader. Instead, you have to find the spaces
between the fielders. You have to find a zag.
What stops most companies from zagging
is the cloud of uncertainty that follows innovation.
In an effort to remove the cloud, marketers often
conduct focus groups, which, while helpful in some
situations, are notably unhelpful for encouraging
innovation. This is because radical differentiation
doesnt test well in focus groups. When you ask
people what they want, theyll invariably say they
want more of the same, only with better features,
a lower price, or both. This is not a recipe for
radical differentiation. This is a recipe for me-too
products with pint-sized profit potential.

34

FINDING YOUR ZAG

A better way to judge a new offering is to map

customer feedback against a success pattern.
When you draw a chart with two axes, one for
good and one for different, you can see how
your business concept stacks up against other
successful zags. You can also begin to see why
most companies are fooled by focus groups.
On the chart, the good axis can include any
attributes that customers typically value: quality
workmanship, good aesthetics, low price, high functionality, ease of use, speed, power, style, and so
on. These are the qualities on which most offerings
compete. The different axis is for any attributes
that make an offering, welldifferent. These can
include attributes that customers may characterize
as surprising, weird, ugly, fresh, crazy, offbeat,
novel, and so on.
As with other charts of this type, the best place
to be is in the upper-right cornerin this case, where
good and different combine to create a successful
zag. Classic examples are the Aeron chair, Citibank,
Toyota Prius, Charles Schwab, and Cirque du Soleil.
However, successful zags usually test poorly with
consumers before theyre launched. They fare pretty
well on the good axis, but then attract so many

FINDING YOUR ZAG

35

Good

Good
But
NOT different

GooD
AND
different

NOT GOOD
AND
NOT DIFFERENT

DIFFERENT
BUT
NOT GOOD

different

36

FINDING YOUR ZAG

Good

Good But NOT different

GooD AND different

Does VERY well in tests

Goes to market easily

Generates incremental

Does poorly in tests

Goes to market w/ difficulty

Customers SOON equate

profits until challenged

differenT with GOOD

by competitors

Generates LASTING profitS

EARNS small market share

EARNS large market share

SOME brand potential

Strong brand potential

3
NOT GOOD AND NOT DIFFERENT

4
DIFFERENT BUT NOT GOOD

Does well in tests

Does poorly in tests

Goes to market easily

Goes to market w/ difficulty

Generates incremental

Eventually fails in market-

profits but eventually

place as customers equate

fails in marketplace

differenT with BAD

EARNS small market share

EARNS NO market share

Little brand potential

NO brand potential

different
THE GOOD-DIFFERENT CHART HELPS YOU
MATCH YOUR CUSTOMERS REACTIONS TO
SUCCESS PATTERNS, RATHER THAN TAKING
THEIR COMMENTS AT FACE VALUE.

FINDING YOUR ZAG

37

negative comments on the different axis that

their companies get nervous and reject them.
Not surprisingly, where companies find the
most encouragement is in the upper-left corner.
Offerings here test extremely well, and the good
comments are rarely undermined by negative
comments such as weird, ugly, offbeat, or
crazy. But the reason customers dont make
negative comments about offerings in this corner
is that theres nothing new or different to dislike.
So while offerings in the upper-left may test
extremely well, theres little chance that theyll
lead to radical differentiation.
Offerings in the lower left corner, where not
good meets not different, test fairly well with customers, since theres not much to dislike or misunderstand about them. While this can encourage
companies to proceed, in the end these offerings
fail because theres either too little demand or
too much competition.
Offerings in the lower right corner usually dont
get off the ground at all. Theyre perceived from
the start to be dogsand guess what?they are.
What makes the good-different chart tricky,
though, is that some of the potential winners in the

38

FINDING YOUR ZAG

upper right corner look a lot like the dogs in the

bottom right corner. The line is often blurry, and
the consequences for making a bad call can be
extreme. It takes an experienced innovator to know
the differencesomeone who can match customer
comments to a previous pattern of success.
When BMW decided to launch the Mini Cooper,
piles of research showed that Americans had no
interest in an ultrasmall car and only wanted more
SUV s. Despite this fact, the zagmeisters at BMW
stepped on the gas instead of the brakes and
motored straight into profitable new market space.
The intrepid folks at BMW had a lot in common
with physicist Niels Bohr. Many years ago one of
his colleagues was invited to deliver a controversial paper to a group of scientists, including Bohr.
Immediately afterward his colleague asked Bohr
how the paper was received by the other scientists.
He replied, We all agree that your idea is crazy.
What divides us is whether it is crazy enough.
The Mini people were crazy, too. Like a fox.

FINDING YOUR ZAG

39

LOOK FOR THE WHITE SPACE.

Finding open market space is a counterintuitive skill.

The human perceptual system is only programmed
to notice whats there, not whats not there. In
perceptual theory, the difference between THERE
and NOT THERE is known as figure and ground, or
positive and negative space. Artists are trained to
appreciate both at once, which may explain why
they sometimes notice things that others dont.
Companies need to think like artists when theyre
looking for new market space, because new market
space, or white space, is the secret to zagging.
Successful market spaces that were once white
space include sticky notes (Post-Its), environmental
music (Muzak), DVDs by mail (Netflix), military-style
cars (Hummer), pre-fab designer houses (Dwell
magazine), direct-to-customer computers (Dell),
and point-to-point airlines (Southwest).
But what other offerings are missing from
the brandscape? How about gourmet drive-through
restaurants? Dinner-club movie theatres? Hourly
nap rooms in airports? Wood-scented barbecue
gas? A national pet-sitting service? Easy-to-change
halogen bulbs? Whiteboard branding books?
Waitthat ones already taken.

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FINDING YOUR ZAG

UNCOVER A NEED STATE.

A powerful technique for finding white space is to

do what Clayton Christensen and Michael Raynor
suggest in their book the INNOVATORS SOLUTION :
Look for a job people are already trying to get
done, then help them do it. Jobs-based innovation,
as opposed to product-based innovation, helps
you get around the difficulty of testing a product
that has yet to be commercialized.
A successful example of jobs-based innovation is the ten-dollar reading glasses you find in
drugstores. The cheap-reader category was pure
white space before someone noticed a job not getting done: People were going without extra pairs
of glasses because they didnt want to spend
hundreds of dollars on prescription pairs. Are the
cheap readers as good as prescription glasses?
Nobut it doesnt matter. At 5% of the price of
prescription glasses, the cheap readers do a good
enough job. So good, in fact, that people buy pairs
for every room in the house, and the category has
become a half-billion-dollar industry.
A.G. Lafley, CEO of Procter & Gamble, has
energized his company by putting a microscope
on the need states of its consumers. Using

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41

WHICH DID YOU SEE FIRST,

THE DOLLAR SIGNS OR
THE HEARTS?

ethnographic research in which researchers move

in with consumers to observe their habits firsthand,
they uncover need states like the one that led
to their hugely successful Swiffer product. They
noticed that the consumer had no easy way to
spot-sweep dry spills without the hassle of a broom
and dustpanand found a solution that helped
her get it done. The simple principle in life, said
Lafley, is to find out what she wants and give it to
her. Its worked in my marriage for 35 years and
it works in laundry. When youre searching for a
need state, dont think so much about the unbuilt
product as about the unserved tribe.
Of course, brands get an extra boost when
theyre powered by trends. Starbucks got a boost
from the trend toward a more European lifestyle.
The Apple iPod got a boost from the trend toward
online music sharing. Charles Schwab got a boost
from the trend toward more customized personal
investing. Whole Foods and Trader Joes got a
boost from the trend toward organic living. Tout
Beau, Jean-Paul Gaultiers line of male cosmetics,
got a boost from the trend toward metrosexuality.
And Axe Body Spray got a boost from an equal
and opposite trend toward macho-sexuality.

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FINDING YOUR ZAG

FIND A PARADE.

I have a vivid memory of standing in the kitchen

one afternoon, home from high-school baseball
practice, jars rattling faintly in the open fridge.
I never showed the potential of a Willie Keeler,
so I was drowning my sorrows in a quart of milk.
Tell me, said my mother. How do you see
your future?
I said, I dont know. I feel like I could be a
leader of somethingIm just not sure what.
She thought. Well, thats not so hard. Just
find a parade and get in front of it.
These two pieces of advice, one each from my
father and mother would make a nice set of bookends for a brand library. Between hitting em where
they aint (differentiation) and getting in front of
a parade (finding a trend), you have the keys to
finding your zag. Now all you need is a process
for building it into a high-performance brand.

Part 2 : DESIGNING YOUR ZAG

BRAND AS A SYSTEM.

In my earlier book, THE BRAND GAP, I showed that

brand-building isnt a series of isolated activities,
but a complete system in which five disciplines
differentiation, collaboration, innovation, validation,
and cultivationcombine to produce a sustainable
competitive advantage. My intent with ZAG is to
zoom in on differentiation to reveal the system
within the system.
While the previous section gave you clues
for finding your zag, this section offers a process
for designing it. I use the word design as econo
mist Herbert Simon used it: Everyone designs
who devises courses of action aimed at changing
existing situations into preferred ones. The preferred situation in this case is a compelling brand
based on radical differentiation. The course of
action is a brand strategy that zags.
All design relies on heuristic thinking more than
algorithmic thinkingmeaning that there is no set
path, no mathematical formula, for reaching your
goal. But you still need rigor and process, otherwise youll drift from one thought to the next with no
more hope of it making sense than the proverbial
thousand monkeys with their thousand typewriters.

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47

CO

u N i C at i O
MM
Ns

fOCus

DiffereNCe

treND

C
WHEN FOCUS IS PAIRED WITH DIFFERENTIATION,
SUPPORTED BY A TREND, AND SURROUNDED
BY COMPELLING COMMUNICATIONS, YOU HAVE
THE BASIC INGREDIENTS OF A ZAG.

In this section Ill share the 17 checkpoints we use

at Neutron to coach our clients through the zag
design process. Each checkpoint addresses one
of four key elementsdifferentiation, focus, trend,
and communicationsindicated by the small diagram at the end of each checkpoint.
To demonstrate how the 17-step process works,
Ive included examples from an exercise we use
in our branding workshops. The object is to build a
brand for a fictitious chain of wine bars. Of course,
no single example can stand in for the entire range
of brand types, but it should help you to visualize
the leap from principles to practice.

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DESIGNING YOUR ZAG

Checkpoint 1: WHO ARE YOU?

The first step in building a brand is to look inside

and see where the raw energy will come from.
White space has little value without the experience,
credibility, and passion needed to fuel success
day after day, year after year, under the pressure
of competition. Joseph Campbells advice to follow
your bliss applies as much to companies as it
does to individuals.
To prove this principle, lets look at what happens when passion is removed from the equation.
Remember the dot-com disasters of the nineties?
There was plenty of passion for stock options,
but little passion for building a real company to
serve the long-term good of a community. As a
result, we saw the proliferation of junk brands
brands with beguiling fronts but nothing real to
back them up. The economy soon collapsed,
taking the junk brands with it. The words of
investor-philosopher Warren Buffett suddenly
rang true. When the tide goes out, you can see
whos wearing bathing suits.
For contrast, lets look at a dot-com business
that has passion behind itGoogle. While Google
has certainly made people rich, the founders have

DESIGNING YOUR ZAG

49

built the brand on a clearly stated moral code:

Dont be evil. This clear philosophy has allowed
the company not only to survive the dot-com bust,
but to inspire employees, delight users, and attract
investorsto a degree no one thought possible.
And what about your company? Wheres your
passion? One way to bring it into sharp relief is by
completing the exercise that the corporate story
experts at C2 (San Francisco) give to their clients
to help them shape their visions. It goes like this:
25 years from now your company is wiped out.
Now, sit down and write your companys obituary.
What would you like posterity to say about you?
Youll find that the answers are also the answers to
the seminal questions: Who are you? Where does
your passion lie? What gets you up in the morning?
Now lets go to our wine bar. We start the journey with a small group of partners who have a
common passion: They love wine, food, travel
and long to share that love with the rest of the
world. Their passion is strong enough to get them
over a number of hurdles, both seen and unseen,
and they have enough experience and credibility
to be taken seriously by customers, partners, and
investors. They have just cleared checkpoint 1.

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51

Microsoft
To put a computer
on every desk and in
every home

Cirque du Soleil
To invoke the imagination,
provoke the senses,
and evoke the emotions of
people around the world

Autodesk
To create software tools
that transform ideas
into reality

Kelloggs
To make quality products
for a healthier world

Kaufman and Broad

To build homes that meet
peoples dreams

Coca-Cola
To refresh
56 1

the world

DESIGNING
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YOURtitle
ZAG

Checkpoint 2: WHAT DO YOU DO?

Next you need to clarify what business youre

inyour core purpose. Core purpose, according
to BUILT TO LAST authors Jim Collins and Jerry
Porras, is the fundamental reason your company
exists beyond making money. Its the one thing
that will never change about your business. For
example, Googles stated purpose is to organize
the worlds information and make it universally
accessible; Disneys purpose is to make people
happy. These are very different companies, but
what they have in common is a clear sense of
who they are and why theyre doing what they
do. Without a clear sense of purpose, companies
tend to grab at short-term gains while incurring
the long-term loss of their identities.
The partners in the wine bar have gotten their
purpose statement down to seven words: To bring
people together through wine education. While
someday they could make small adjustments to
their purpose, theyve agreed on a differentiating
ideaeducation.
How many words will it take to articulate your
purpose? If it takes more than 12, go back to
checkpoint 1, or set it aside and return to it later.

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Checkpoint 3: WHATS YOUR VISION?

A companys core purpose gives it a heading,

a direction toward the future. While a companys
purpose can be abstract, a companys vision should
be concrete. Its an illustration of the futurea
picture shared by the entire company. A soul
never thinks without an image, said Aristotle,
and a company never acts without a vision.
The word vision is tossed around a lot in
business today, but often what passes for vision
is merely the LEADERS vision. True vision cant be
imposed on a companyit has to grow from the
shared purpose and passion of its people. The
leaders job is to shape and articulate that vision,
making it palpable, memorable, inspiring. True
vision leads to commitment rather than compliance,
confidence rather than caution.
The relationship between purpose and vision
was explained vividly by Peter Senge in THE FIFTH
DISCIPLINE . Referring to the Kennedy years, he said
a purpose is advancing mans capabilities to
explore the heavens. A vision, on the other hand,
is a man on the moon by the end of the 1960s.
Everyone could picture that man, up there on the
moon, planting an American flag in the soft sand.

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DESIGNING YOUR ZAG

Without a clearly drawn vision, its dangerous

to empower people. It only leads to confusion,
anxiety, and distrust as employees work at crosspurposes, often taking refuge in functional silos
instead of collaborating to transform a shared
picture of the future into reality.
How do you shape a vision? The vision
designers at Stone Yamashita Partners advise
their clients to produce vision deliverables: a brochure, a script, an important speechanything
that forces them to articulate their vision to the
outside world. When you put your vision to paper,
you can immediately see its flaws. Then you can
reinforce it to withstand the slings and arrows that
test the resolve of any organization.
Back at the wine bar, the partners are busy
sketching a picture of their own companys future.
They envision at least one Tastings (name to
come) in every college town across America.
Each bar has a hundred wines from around the
world, all available by the glass, in a constantly
changing menu of varietals and producers. They
see happy groups of people learning about wine,
talking about wine, and swapping stories about
food, travel, and the cultures theyve experienced.

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Checkpoint 4: WHAT WAVE ARE YOU RIDING?

The first three checkpoints illustrate the role of

focus in building a zag. The next five checkpoints
will show how focus connects to its powerful twin,
differentiation. But lets take a break for a moment
to consider the role of trends in driving both.
You can certainly build a brand without
harnessing a trend, but you wont get the raw,
youthful energy of a zag. When focus and differentiation are powered by a trend, the result is a
charismatic brand that customers wouldnt trade
for love nor money. Its the difference between
paddling a surfboard and riding a wave.
What trends can you ride? The variety is
virtually endless, since each industry, region, and
subculture spawns its own trends. Sometimes a
trend is a reaction to a previous trend that has lost
its cachet, such as the way rock stars replaced
crooners in the fifties. Other times its the result
of a technological innovation, such as the manufactured molecule Kevlar igniting a revolution in
textile manufacturing. Some trends, such as
democracy, are still gaining strength after hundreds
of years, while others, such as body piercing, may
end up as a half page in the history of fashion.

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DESIGNING YOUR ZAG

Examples of current trend-riders are Samsung

with high-design gadgets, Anthropologie with
eclectic clothing, Progressive with self-service
insurance, Dean & Deluca with gourmet groceries, Aveda with prestige eco-friendly cosmetics,
Design Within Reach with neo-Modernist furniture,
and Volkswagen with its new transparent factory
and car-recycling facility. When you look under
the hood of a high-performance brand, you almost
always find its powered by a trend.
Trend power is increased when a brand rides
more than one trend at a time. Our fictitious
wine bar is riding severalthe trends toward the
democratization of wine, international travel,
sustainable farming, affordable luxury, and gourmet food. With a little work, it could also ride the
trends toward integrated technology, experience
design, self-service, and duty-free shopping.
It could also ride wine industry microtrends such
as the trend toward low-priced wines, locationspecific wines, or corkless packaging.
Trends are the tides that lift all boats.
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authenticity

organic

miniaturization

food

longevity

body

green living

enhancement

health care

personal

openness

technology

democracy

affordable

high design

luxury

home

outsourcing

creativity

self-service

Mobile
Computing

personal

online

creativity

shopping

simplicity

gourmet

sustainability

cooking

environmental

design

nostalgia

instant

spirituality

responsibility

world travel

communication

slow food

metrosexuality

movement

professional-

Neo-Modernism

mental
fitness

grade tools

pet services

on-demand
technology

Eastern

interactive

influences

entertainment
2

Checkpoint 5: WHO SHARES THE BRANDSCAPE?

A brand doesnt exist in a vacuum. The passion,

purpose, and vision that drive a company may
be virtually identical with those of competitors.
Youve probably seen the lists of core values
that companies publish to help them define their
cultures. When you look at these lists across an
industry, they appear to be selected from a short
list of about 12 virtues. Our companys culture
is (choose four): innovative, market-driven, customer-focused, ethical, responsive, collaborative,
trusted, quality-minded, progressive, proactive,
responsible, and optimistic.
While virtues like these are admirable, zagging requires that a company define itself by what
makes it UNIQUE , not what makes it admirable.
Here we need to leave the realm of focus and
enter the territory of differentiation.
Every competitive category has its winners
and losers. In brand building, winning and losing
is relative, since there may be room for three,
four, or even more brands to exist profitably in one
category. But whats especially interesting about
competitive categories is how they tend to arrange
themselves into predictable hierarchies.

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DESIGNING YOUR ZAG

In a mature category, what you often find is that

the number-one brand has roughly twice the
market share of the number-two brand, which
has roughly twice the share of the number-three
brand, which has roughly twice the share of the
number-four brand, and so on, until theres no
market left to share. In categories that support
more competitors, the differential between the
market shares is less dramatic, but the hierarchy
is still intact.
This phenomenon conforms to what network
theorists call power lawslaws that explain
why success attracts success, or why the rich get
richer. In the world of power laws, market-share
hierarchies are controlled by customers, who
collectively determine the success order of competitors. Success order, in turn, is determined by
two factors: the birth order of competitors, which
includes the much-touted first-mover advantage,
and preferential attachment, the network theorists
term for popularity. As positioning experts Jack
Trout and Al Ries have often stated, the biggest
winner is not the brand thats first into the marketplace, but the one thats first into peoples minds.

DESIGNING YOUR ZAG

61

Given the presence of power laws, the only positions worth owning in most categories are numbers
one and two. Number three might be a useful
position from which to unseat number two. Below
number three, however, it usually makes more
sense to start a new category than to battle the
top three incumbents. The list on page 64 describes
some of the circumstances that activate power
laws in favor of the leading brand. Jack Welch
clearly understood the power of market leadership
in 1981 when he told his business heads to fix,
sell, or close any GE division that wasnt either
one or two in its category.
The power law that governs brand leadership
can be reduced to a simple formula:

FIRST MOVER

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POPULARITY

LEADERSHIP

DESIGNING YOUR ZAG

Some brands are especially susceptible to power

laws, such as those that act as hubs in a technological, industrial, or social network. The reason
Microsoft is so strongly positioned in the marketplace is that the marketplace doesnt really want
another standard for operating systems. Its the
same reason that Microsoft will find it difficult to
unseat Adobe in document portability. One PDF
standard is enough.
But what about the wine bar? What category
will it attempt to lead? Since a chain of educational
wine bars is a new concept, it has a chance to be
the first-mover in a new category, with leadership
guaranteed in the short term. In the long term,
however, it will need to achieve the second part of
the power lawpopularityto remain the leader
when competitors enter the category.
Of course, the wine bar will have a certain
amount of competition even before it establishes
a new category. In the beginning it will compete
with existing alternatives such as traditional bars,
self-service wine bars, tasting rooms, wineshops,
and restaurants. Therefore its crucial that it be
born with a fully formed zag.
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 Circumstances that favor

the leading brand:
1 when the
2 when

category

comparison

3 when the

price

4 when the

interest

5 when a

is confusing (cell phones)

is difficult (advertising agencies)

is high (automobiles)

standard

level is low (table salt)

is needed (operating systems)

6 when the

benefits

are intangible (banking)

7 when the

features

8 when the

advantages

9 when the

risk

are technical (pharmaceuticals)

factor is high (law firms)

10 when customers want

74 1

Zag_text_pages.indd 78

are unprovable (jewelry)

prestige

(fashion)
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Checkpoint 6: WHAT MAKES YOU THE ONLY?

Complete this sentence: Our brand is the ONLY

__________ that __________. In the first blank,
put the name of your category (frozen pizza, furniture dealership, computer repair service). In the
second blank, describe your zag (that tastes like
Naples; that sells sustainably manufactured furniture; that makes house calls). If you cant keep it
brief and use the word ONLY, then you dont have
a zag. Your best option in that case is to make
a list of all the competitors who could make the
same claim, then start to shift your strategy away
from theirs.
Remember, a zag is not merely differentiation,
but RADICAL differentiation. So when my local bank
bought a fifty-foot outdoor poster emblazoned
with the tagline, Nice. Since 1878, theyd have
been better off putting their money in a savings
account. Nice is not a zag, and neither is 1878.
A zag is what Citibank did when they positioned
their company as the anti-bank with the tagline,
Live richly, and headlines such as, For a guaranteed return on investment, try buying flowers.
Onliness is the true test of a zag. If you cant
say youre the only, go back and start over.

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65

Does the wine bar concept pass the onliness test?

Lets try it. Our brand is the ONLY chain of wine
bars that builds community around wine education.
Yep. That works. Even with this simple statement
you can see that there are three unique attributes
that will set the brand apart: Its a chain instead of
a one-off; its about community, not just customers;
and its built on education, not just enjoyment.
Now that youve got the principle, heres a more
detailed version of the exercise to help you pinpoint
your onliness. It parallels the journalistic model of
storytelling: WHAT is your category? HOW are you
different? WHO are your customers? WHERE are
they located? WHEN do they need you? and WHY
are you important?
For Harley-davidson

what: The ONLY motorcycle manufacturer

How: that makes big, loud motorcycles
Who: for macho guys (and macho wannabees)
Where: mostly in the United States
WHY: who want to join a gang of cowboys
When: in an era of decreasing personal freedom

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 For Wheat Montana Farms

WHAT: The ONLY wheat distributor

HOW: that sells grind-it-yourself wheat in stores
WHO: for serious home bakers
WHERE: in the United States
WHy: who want fresh-ground flour for baking
WHen: in an era of growing interest in slow food
For The White Stripes

WHAT: The ONLY

HOW:
WHO:

WHERE:
WHy:
When:

pop music duo

that records crude yet hip rock songs
for young urbanites
in the U.S. and other first-world countries
who long for authenticity
in an era of overproduced, me-too music

For Hooters

WHAT: The ONLY

HOW:
WHO:

WHERE:
WHy:
WHen:

chain of restaurants
that hires overtly sexy waitresses
for young male customers
in the United States
who want to indulge their libidos
in an era of strict political correctness

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67

Notice the extra detail yielded by this format.

You not only get the category (WHAT) and the point
of differentiation (HOW ), but you also segment
the audience (WHO), narrow your market geography
(WHERE), focus on a need state (WHY), and define
the underlying trend (WHEN). Now lets go back
to the wine bar.
For the wine bar

WHAT: The ONLY chain of wine bars

HOW: that builds community around education
WHO: for men and women of drinking age
WHERE: in cities and progressive towns in the U.S.
WHY: who want to learn more about wine
WHen: in an era of cultural awakening
An onliness statement provides a framework for
your zag. Once youve defined your point of
differentiation, you have a decisional filter for all
your companys future decisions. By checking
back against your statement you can quickly
see whether any new decision will help or hurt,
focus or unfocus, purify or modify your brand.

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Our
is the only
that

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A SPECIALTY STORE IN a big city

AND A GENERAL STORE IN A SMALL TOWN
must ADHERE TO THE SAME principle:
THE WIDER THE COMP

THE NARROWER THE FOCUSAND VICE VERSA.

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Checkpoint 7: WHAT SHOULD YOU ADD OR SUBTRACT?

One of the most powerful principles in building a

brand is focused alignment. Unfortunately, its a
principle honored more in the breach than in the
observance. Why? Because we humans are more
adept at adding elements than subtracting them.
We LOVE to start new initiatives and build, build,
build. We HATE being told no. The principle of
alignment, by contrast, is best served by extreme
focus and self-discipline.
Brand alignment is the practice of linking your
business strategy to customer experiencealigning all your company behaviors behind a clearly
articulated zag. There should be no leftover parts,
no maverick offerings, no contradiction between
what you say and what you do. The result of
alignment is coherence; the result of nonalignment is wasted resources.
In our workshops we demonstrate alignment
using the sacrifice game. In this exercise teams
of participants start with a well-known brand,
decide what makes it different and desirable,
then prune back the brand to its core meaning by removing unaligned elements. Only then
do the teams suggest new elements that might

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increasenot decreasethe focus of the brand.

Thus they might decide that Ralph Lauren Polo
stands for classic upscale American clothing. To
increase brand alignment, they might suggest that
the company keep the clothing and accessories,
but drop elements such as dog gifts, wall paint,
furniture, TV show, magazines, and restaurants.
They might then suggest adding one or two
elements such as luggage or equestrian clothing.
The rule of thumb is simple: If adding an
element to your brand brings you into competition
with a stronger competitor, think twice. You may
well end up wasting energy and confusing your
customers in the bargain.
Consider the case of GM, who recently
licensed its Cadillac logo to Kent International to
create Cadillac Bicycles. According to the Cadillac
folks, This is the perfect way to break through
preconceptions of what [customers] think they
know about Cadillac. Exactly. Now theyll think that
Cadillac is a luxury car and bicycle company. Why
not just stay focused and build a better American
luxury car? Theres still plenty of room at the top.
Lou Gerstner, former CEO of IBM , was fond of saying, If you dont know where youre going, any

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WHICH ONE IS THE CADILLAC?

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DESIGNING YOUR ZAG

direction will get you there. Cadillac saw the fork

in the road, and took it.
How should our wine bar be aligned? Of
course, since were still in the conceptual stage,
there are no mistakes to correct or elements to
sacrifice. But there is an opportunity to pre-sacrifice a few assumptions. One assumption is that
wine should cost about $7 a glass. Who says?
If the brand is based on wine education, the students could end up spending more than they did
on college. How about a range of learning wines
for $2 a glass? Another assumption is that wine
should always come in bottles. What if we put our
learning wines in boxes that slow down oxidation? Or let customers bring in their own empty
bottles as they do in some parts of Europe? We
could then dispense fresh wine from stainless
steel containers for a much lower price. Another
assumption is that a wine bar should look like a
winery, with lots of stone, rough wood, and leaded
glass. Who says? What if it looked like a college
library instead?
The quickest route to a zag is to look at what
competitors do, then do something different.
NoREALLY different.

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Checkpoint 8: WHO LOVES YOU?

Every brand is built by a community. Not just the

community of people inside the company, but its
partners, suppliers, investors, customers, noncustomers, and even competitors. Its a complete
ecosystem in which there are gives and gets all
around. Everyone has a role to play, and everyone
should be repaid for their efforts.
Let me illustrate this point with a story.
Most mornings I take my dog for a latt at a
local caf. The latt is for meBoodles gets a
biscuit. The caf is nothing much, just a mom-andpop retail shop in a strip mall, with bare concrete
floors, a row of amateur photos on the wall, some
scruffy couches on one side, a big coffee-roasting
machine on the other side, and parking in front.
The place is run by a nice Middle Eastern couple
who keep it humming 365 days a year, except for
a half-day off at Christmas.
On my first day there I was confronted with a
long line. Yet, surprisingly, the line moved briskly.
Not only that, everyone seemed to know everyone elses name. After a few more visits, I started
to catch on. They had a loyalty programa little
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of 10. They write your name and your favorite drink

on the card, then punch it every time you order.
The result of this system is that everyone gets
to know your name, and soon you know everyone
elses name. Not only that, the counter people
learn to recognize your car when you pull into
the parking lot, so they have your drink ready
when you get to the head of the line. Over time,
little cliques of customers form and reform to chat
with each otherover there on the couch, then
at this table, that table, outside on the porch.
The advance team from Starbucks couldnt
help but notice all the activity at the caf, and they
soon opened a beautifully appointed store on the
same block. Do you remember where you were
on September 11, 2001? I do. I was parking my car
at the caf, just weeks after the new Starbucks
opened. Among the thoughts that flashed through
my mind: These poor peoplebetween the cultural
backlash and the new Starbucks, theyre history.
So I resolved to lend my moral support by coming in
the next day, rain or shine. When I pulled into the
parking lot, my jaw droppedthe line of customers
stretched out the door and around the building.

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What is it that spawns such loyalty? How could

this little place build the type of community that
Starbucks only dreams of? Simple. Its in the
gives and gets. The owners work hard so they can
make a decent living. Customers come in every
day so they can make new friends. The freelance
baker makes special pastries so she can have a
happy, fast-paying client. The landlord gives the
caf lower rent so it will attract customers for the
other tenants. I get my latt and Boodles gets her
biscuit. Meanwhile, Starbucks does only a modest
business on the same block.
Could the wine bar profit from similar thinking?
What will the customers get from joining the tribe?
How about the employees? The wine producers?
The neighboring shops at each location? The
local cops (who may have to be called from time
to time)? The local school system? Community
charities? The investors, partners, and suppliers
who help build the brand? The wine industry as a
whole? To keep the system healthy and growing,
everyone needs to contribute, and everyone
needs to benefit.

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WI

OM
A C

MUN

ITY, AND THE COMMU

NIT

Y B
E

NE

FIT

FR

OM

TH

N
D

TH

S
XI

TS

HIN

PART

RS

T
MEN

AN

U
P

PL

NU

RS

ST

ER

AT

TR

IE

AN

E
AG

NE

CEED BY HE

URE

SUC

RT

VE

LPI
NG

IN

PA

NY

SU

PL

OYE

CCE

E
RT

ES

PO

SUP

EM

TH

ST

ED

A BRAND IS PART OF AN ECOSYSTEM IN

WHICH EACH PARTICIPANT CONTRIBUTES AND
EACH PARTICIPANT benefits.

A BRAND IS PART OF

AN ECOSYSTEM IN WHICH

EACH PARTICIPANT CONTRIBUT E S A N D

EACH PARTICIPANT GAINS

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DAVID WAS NOTHING

WITHOUT GOLIATH.

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Checkpoint 9: WHOS THE ENEMY?

Everyone cant be your friend. Rather than trying

to please everyone at the risk of pleasing no one,
step right up and pick a fight. Just make sure you
take on the biggest, most successful competitor
you can find. Why? Because it puts the RADICAL
in radical differentiation. Brand history abounds
with evidence that David can take on Goliath and
winAvis taking on Hertz, Apple taking on IBM ,
the tiny Mini taking on the giant SUV s. The goal is
not to topple the big guys, but to employ the principle of contrast to throw your zag into sharp relief.
Sometimes the enemy is not a competing
company but the old way of doing things. Point it
out! Point out to doctors that in handling their own
bookkeeping they may be losing half their profits.
Point out to travelers that $200 for a hotel room
may be twice the value of a nights rest. Point out
to supply chain managers that using faxes and
sticky notes instead of software may be costing
their company millions.
The enemy of the wine bar? How about the
priesthood of wine snobs who use the mystique
of wine to inflate prices and intimidate people?
Let the revolution begin!

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Checkpoint 10: WHAT DO THEY CALL YOU?

Its an ironic fact of marketing that a brands

most valuable asset is often the one given the
least attentionits name. Maybe this is because
new products, services, and companies are often
christened before marketing teams are in place.
Maybe its because the founders believe its their
entrepreneurial privilege to name their own children.
Or maybe its because they arent aware of the
widening costs of a poorly named brand, or the
streamlining effects of a well-named one.
Lets imagine a tale of two companies, both
entering the highly competitive market for personal electronics. One is named Personal Media
Devices, and the other is named Yubop.
The founders of Personal Media Devices
are extremely pleased with their company name,
because, as one executive put it, It says it all.
One look at the name and people will know exactly
what we sell.
Now lets fast-forward five years. Personal
Media Devices faces increasing competition
from companies whose names are International
Media Devices, Personal Media Systems, and
International Media Machines. In addition, people

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have quickly tired of saying Personal Media

Devices and now call the company PMD . New
customers have little idea of what PMD stands for,
and are easily confused by its similarity to companies called PMC , DMD , and PDM , as well as their
actual competitors, whose names people have
already shortened to IMD , PMS , and IMM . Confused
yet? PMD s customers are.
To differentiate themselves from the competition,
PMD now spends an increasing amount of money
on advertising and public relations to remind people
that their company was one of the first and still the
best. Even so, people cant remember if its a PMD
product that they wanted or a PMC product. PMD
responds to increasing competition by decreasing
its prices, and soon has to decrease its advertising budget as well. Meanwhile, a competitor called
Yubop is causing the company fits.
The founders of Yubop were chided when they
first proposed the name. As one investor said,
It just doesnt sound like a serious company. Yet,
on the basis of its brevity, differentiation, and URL
availability, they decided to go forward with it.
Five years later, Yubop is a household word.
The tagline Who bop? has become one of the

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strong and weak NAMES

Categories Strong names Weak names

retail bank Citibank First Bank & Trust

movie studio

Dreamworks

shipping FedEx
SUV model

United Artists
DHL

4Runner Touareg

skin products Olay Noxzema

farm equipment

John Deere AGCO

investing Charles Schwab Wachovia

magazine

Dwell Architectural Digest

sports apparel

Under Armour InSport

cat food

Meow Mix Eukanuba

bus service Greyhound Intercity Transit

PDA

BlackBerry Anextec SP230

coffee/tea shop Starbucks Coffee Bean & Tea Leaf

cellular service Orange

MetroPCS

natural care

Herbal Luxuries

Burts Bees

refrigerator Sub-Zero Thermador

law firm Orrick Wilson Sonsini Goodrich & Rosati
office equipment Xerox Kyocera Mita
online payments

PayPal Click & Buy

network storage

Brocade Network Storage Corporation

oil and gas Shell

Unocal

erectile drug Viagra Cialis

billing service

Department B American Billing Service

car model Crossfire Achieva

car insurance

Progressive GEICO

internet voice Lingo

iConnectHere

jams and jellies Smuckers

Mary Ellen

TV search

Blinkx.TV

MeeVee

office supplies Staples OfficeMart

womens TV

We

PC sound card

Mockingboard Terratec EWS64 XL

Romance Classics

optical lenses Carl Zeiss Sony Lenses

life insurance

MetLife American United

Web search Google Ask

For my critique of these names, go to www.zagbook.com/namecrit.

s e csection
t i o n t title
itle

most familiar phrases in advertising, with people

using it in their everyday conversations. The
Yubop creative community finds endless ways
to play with the name in customer communications (I bop, we bop, they bop, Yubop), and word
of mouth is now so strong that the companys
marketing budget is considerably lower than the
national average, while profit margins are higher.
Can a name do all that? Just ask Starbucks,
jetBlue, TomTom (portable navigation), Brocade
(storage networks), and Smuckers (jam). A poor
name is a drag on the brand building process,
but a good name accelerates it.
If your brand name is already locked in, you
can move to the next checkpoint. If not, here are
some quick tips for naming from THE BRAND GAP.
A name should be: 1) different than those of competitors, 2) brieffour syllables or less, 3) appropriate, but not so descriptive that it sounds generic,
4) easy to spell, 5) satisfying to pronounce, 6) suitable for brandplay, and 7) legally defensible.
Meanwhile, back at the wine bar, the founders
have worked hard to improve on their temporary
name, Tastings. Their final choice? Turn the page
and see.

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CURRICULUM SUGGESTS EDUCATION,

WHILE a RED WINE STAIN CREATES A
LETTER C FOR USE AS A BRAND SYMBOL.
BUT IS THE NAME TOO SNOBBY?

IN VINO VERITAS MEANS THAT WINE

LOOSENS THE TONGUE. USING ONLY
VERITAS (LATIN FOR TRUTH), AVOIDS
THE OVERUSED VINO. BUT does it

implicit

seem TOO UPSCALE?

THREE OVERLAPPING GLASSES SUGGEST

A WINE TASTING, BUT BOTH THE NAME
AND THE GRAPHICS ARE MUCH TOO
PREDICTABLE. IS THERE A WAY TO ZAG?

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COMBINED WITH THESE

GRAPHICS, UNCORKED SEEMS
LIKE A FUN PLACE TO TALK AND
TASTE WINE. BUT WHERES THE
CONNECTION TO EDUCATION?

THIS IS A CLEVER REFERENCE

TO THE FAMOUS INTERSEC
TION IN HOLLYWOOD WHERE
PEOPLE LIKE TO MEET. BUT IS
HOLLYWOOD APPROPRIATE?

BIBLI IS EUROPEAN SLANG

FOR BIBLIOTEQUE, OR LIBRARY,
WHICH provides A GOOD
METAPHOR FOR EDUCATION.
ITS ALSO CATCHY AND BRIEF.
BINGO!

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Checkpoint 11: HOW DO YOU EXPLAIN YOURSELF?

All brand communications should emanate from

an internal positioning line, or trueline. A trueline
is the one true thing you can say about your brand,
based on your onliness statement. It must be
something that your competitors cant claim (or
wont), and something that your customers find both
valuable and credible. Remember, its not what
YOU say, but what THEY say, that counts. In a
nutshell, your trueline is your value proposition,
the reason your brand matters to customers.
An example of a trueline is what people might
say about Southwest Airlines: You can fly just
about anywhere for less than it costs to drive. Or
for Mini: The small car for people who want a fun
driving experience. Or for eBay: The place to trade
practically anything on Earth. From a customers
perspective, these are the basic, differentiating
truths about these brands. They cant be reduced,
refuted, or easily dismissed.
Once you have your trueline, its a short step
to a customer-facing tagline. For example, when
Southwest says, Youre now free to move about
the country, theyre simply translating their trueline
into a more polished form. What theyre tapping

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into is our belief that Southwest offers a kind of

freedom that we didnt have before. When Mini
says, Lets motor, theyre translating a whole complex of feelings into a tribal message: If you appreciate small, high-performance cars like the ones
found in Europe, and you hate the American trend
toward clumsy, gas-guzzling SUVs, come and join
us. And when eBay calls itself the worlds online
marketplace, the company is reminding us that,
as the planets largest swap meet, it can offer the
greatest number of buyers and sellers.
Of course, the key to crafting truelines and
taglines is to focus on a single proposition. If you
find yourself using commas or ands to write
your tagline, you may need more focus. The rule?
One proposition per brand.
Biblis trueline grows directly from the thinking
behind its name: Its the place where people meet
to learn more about wine. But with a little polishing,
and a slight shift in emphasis toward the customer,
this trueline can easily be turned into a tagline:
Bibli. Educate your palate. Three words with
no commas or ands.

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 TRUeLINES AND TAGLINES

1 A. G. Edwards takes a personal interest in your nest egg.
Fully invested in our clients.
2 Citibank knows that money is only a means to happiness.

Live richly.

3 Audi makes cars for people who take the road less traveled.
Never follow.
4 Chapstick is the secret to healthy lips in extreme weather.
My lips are sealed.
5 Bowflex equipment gives you gym-quality results at home.
Work yourself out.
6 Disneyland is the worlds favorite amusement park.
The happiest place on Earth.

7 Charles Schwab is not just a company, but a real person.

Talk to Chuck.

8 Earthlink gives you services that make e-mail easier.

Earthlink revolves around you.

9 Nike helps you find your inner athlete.

Just do it.

10 Heller Ehrmann is the legal firm that overturns the stereotype.

Challenging the laws of convention.

11 Hooters is the politically incorrect restaurant for rowdy men.

Delightfully tacky yet unrefined.

12 Las Vegas is where the world goes to be naughty.

What happens here, stays here.
13 Lending Tree rounds up online bids from lenders.
When banks compete, you win.

section title

Checkpoint 12: HOW DO YOU SPREAD THE WORD?

Okay. So youve got a name, a trueline, and a

tagline. Now you need to unpack the meaning
hidden within those assets and deploy it across
a series of touchpointsthe places where customers will come into contact with your brand
so they become true believers and spread the
gospel to their friends. This brings you face to
face with the hurdles discussed earlierextreme
market clutter, increasing demands on peoples
time, the fractured advertising model, and tribal
buying habits. Where do you put your limited
communication dollars to get the highest return?
Sim Wong Hoo, the CEO of Creative Technology,
was quoted as saying, Our biggest challenge
is marketing. But Im stingy. I dont want to waste
money unless I know its going to work. Apparently,
Mr. Hoo believes marketing is wasteful even when
it works. Contrast this attitude with that of Steve
Jobs, CEO of Apple, who believes marketing is a
crucial part of the product. Both companies sell
MP3 music players, but Apple has sold more than
4 million per quarter, while Creative Technology
has sold only a tiny fraction of that number since
the very beginning. A recent tally puts the total

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number of MP3 models in the world at 14,659.

How many brands can you name? The iPod?
In fact, a closer look at iPods communications
reveals very little waste. The same images that
are used in TV advertising are also used on billboards, collateral pieces, trade shows, store environments, and retail packaging. The brand uses
one voice across all touchpoints, the places where
customers experience the brand. At the touchpoints
where Apple marketers choose to compete, they
win. Where they cant win, they dont compete.
While not every company can be Apple, every
company can use Apples approach to marketing.
It starts with a zag, and continues by aligning
all the customer experiences with the zag. Since
a zag is designed to stand out from the clutter,
a marketing plan based on zagging will appear
much larger than it is. In the parlance of the day,
it will maximize marcom ROI .
The Bibli budget, for example, could be focused
on in-store communications so that customers
become the channel for spreading the gospel.
Touchpoints might include packaging, wine glasses,
branded books and DVDs for sale, plus wine tips
that customers can easily share.

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APPLES SHOPPING BAGS ARE

PeRfectly aligneD witH its BRanD
DesigneD anD DesiRaBle.

Designing yoUR Zag

Checkpoint 13: HOW DO PEOPLE ENGAGE WITH YOU?

Before you can align your touchpoints, you have

to define what youre selling and how youre going
to sell it. Naturally, this has cost-benefit implications. But since a brand is a persons gut feeling,
its better to address the problem with gut feeling
rather than cold logic. What youre looking for are
ways to build your zaglater you can analyze the
profit potential of the various components.
You may find that in building your zag youll
want to give away items that your competitors
sell at a profit. Or you may find that your competitors are beating each other up by competing
in the same way, or in the same areas, and that
you can steal a march by ceding those battles.

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In BLUE OCEAN STRATEGY , authors W. Chan Kim

and Renee Mauborgne offer a systematic way to
reposition competitors by changing the rules of
engagement. The idea is to head for uncluttered
market space (blue ocean) instead of space characterized by bloody competition (red ocean).
Since Bibli was conceived from the outset
to occupy new market space, the founders might
map it against the closest competitors, such as
traditional wine bars, restaurants with wine lists,
and wine shops with tasting rooms.
What can Bibli offer that competitors cant or
wont? Inexpensive learning wines by the glass?
Educational content presented on large video
screens? Blind-tasting games in which customers
compete to identify varietals? Group excursions
to wine-producing countries? A content-rich Web
site with a constantly changing tasting schedule?
Demonstrations of food and wine pairings?
Private-label take-home wines?
The best rule to follow when mapping your
value proposition is to forget about so-called best
practices. Best practices are usually common
practices. And common practices will never add up
to a zag, no matter how many of them you apply.

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Checkpoint 14: WHAT DO THEY EXPERIENCE?

While strategy is a powerful discipline, many

companies forget that without good execution a
strategy is only a planan intention. Every year
thousands of strategic plans fail because they
werent translated into compelling customer
experiences. In short, the road to hell is paved
with good strategy.
Customers experience your brand at specific
touchpoints, so choosing what those touchpoints
are, and influencing what happens there, is
important work. The best way to start choosing
and influencing your touchpoints is by mapping
your customers journey from awareness to brand
loyalty. How will they learn about you? How can
you help them enroll in your brand? Whoor
whatwill be your competition at each of the
touchpoints? Where should you put your marketing
resources? More to the point, where should you
NOT put them?
The marketers for the wine bar, for example,
might make a list of touchpoints that goes something like this: Word of mouth, driving by, walking
by, introduced by a friend, newspaper ad, radio
commercial, online ad, Web search, the Bibli

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Web site, editorial coverage, direct mail, the design

of the interior, the behavior of the staff, wine glasses,
menus, product packaging, educational materials,
on-site learning games, wine-tasting events, a wine
travel program.
They might then prioritize them according to
their potential for alignment. Thus, the interior
space might be high on the list for funding, since
it could be designed to encourage conversation.
Electronics might also receive special attention,
including a large video-screen array behind the
bar, custom-designed content to deliver education, entertainment, and wine-tasting games, and
ultra-fast checkout with handheld computers. Less
important touchpoints would receive less funding,
and others, especially those used heavily by competitors, would be dropped entirely.
Every brand is built with experiences, whether
the brand is a company, a product, or a service, and
whether it serves individuals or businesses. The
key is to craft those experiences so they create
delight for the people who determine the meaning
and value of your brandyour customers.

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COULD BIBLI have A BAR-LENGTH SCREEN system TO DELIGHT CUSTOMERS

WITH PRODUCT OFFERS, ENTERTAINMENT, AND LEARNING EXPERIENCES?

Checkpoint 15: HOW DO YOU EARN THEIR LOYALTY?

Let me toss some statistics at you. More than

50% of customers would pay a 2025% premium
for their favorite brand before switching to another
brand. In some categories, a 5% increase in loyal
customers can produce a 95% increase in profitability. In certain luxury categories, 10% of the
customers generate 50% of the sales. Its enough
to make any marketers heart beat faster.
Scott M. Davis and Michael Dunn, in their book,
BUILDING THE BRAND-DRIVEN BUSINESS , offer six
reasons for encouraging customer loyalty: When
customers are loyal, 1) they stop considering other
brands, 2) they request your brand by name,
3) they recommend your brand to others, 4) they
wait longer and travel farther to get your brand,
5) they accept brand extensions more readily,
and 6) they continue to pay a premium price.
Heres another statistic. In todays cluttered
marketplace, a full 80% of customers are vulnerable to competitive offers, and fewer than 20%
are willing to recommend your brand to others.
With the odds so steep and so much at stake,
no wonder there are so many loyalty programs
out there. Do they work? Most dont, and here

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are six reasons why: 1) loyalty programs are

often based on discounts, which train existing
customers to expect low prices and wait out normal prices, 2) they attract loyal customers who
would happily pay a premium, 3) they discourage
new customers by making them feel punished or
excluded, 4) they encourage competitors to retaliate with me-too programs, 5) they reduce profit
margins, which 6) reduces the companys ability
to serve customers at formerly high levels.
The truth is, loyalty cant be programmed.
As soon as customers begin to feel stalked,
they choose fight or flight. They either figure
out how to game the system, or else they run
to another brand.
Maybe youve had this experience: A few
months ago I popped into a Safeway to pick up
some groceries on my way to the office. Normally
I shop at another market, so I was surprised to
find some very attractive prices. When I got to
the counter, the checker asked: Do you have a
Safeway card? She said if I wanted the low prices,
I had to fill out an application. I abandoned the
items on the counter, and havent been back
to a Safeway since.

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CUSTOMERS
DEFECT TO

COMPETITORS

COMPANY CUTS

COMPANY BUYS

FOR DISCOUNTS

DISCOUNTS

SERVICE TO PAY

LOYALTY WITH

COMPETITORS

MATCH LOYALTY
DISCOUNTS

How loyalty programs

turn into disloyalty programs.

Maybe youd respond a different way. You might

take the card, slip it into your wallet with your other
cards, then play the stores against each other.
In either case, wheres the loyalty? Its missing,
because real loyalty cant be bought; it can only
be earned. It starts with companies being loyal to
customersnot the other way aroundand only
becomes mutual when customers feel theyve
earned the loyalty theyre receiving.
To illustrate the principle of mutual loyalty, lets
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the wines customers have tasted, along with their

personal ratings. Customers could then access
their history on the Bibli Website, either on their
own handheld devices or ones carried by servers,
to see what theyve already tasted and get recommendations for other wines they might like.
As they get experience with various wines,
a point system might automatically graduate them
to higher levels of privilege. Maybe at novice
levels theyre offered a free taste of a premium
wine with their next tasting flight. At expert
levels they receive a discount on premium bottles
of wine from the library, which they can share
with friends, introducing newbies to Bibli. Thus
every visit to Bibli would become an investment
in relationships, with the company making the
first move, and customers reciprocating by bringing in their friends. With this model there would
be no feelings of entrapment, and no sense of
being punished for not being in the program.
For brand loyalty to grow, it must be earned,
and it must be mutual. As adman David Ogilvy
famously observed, Any damn fool can put on a
deal, but it takes genius, faith, and perseverance
to create a brand.

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Checkpoint 16: HOW DO YOU EXTEND YOUR SUCCESS?

The thorniest question in brand strategy is how to

keep growing. At some point in the life of a successful brand, marketers will feel the pressure to
extend its success by leveraging the brand into
other offerings. The hope is that the brand name
will become a platform for a whole line of products
or services, with each new product or service
building on the customer loyalty already accrued.
Brand extensions can make a lot of sense.
If the original brand has positive associations for
customers, there may be untapped value that the
company can mine. In return, new extensions can
reinforce the meaning of the original brand, making
it more valuable. Also, there may not be enough
space in a given category to justify the resources
it takes to launch and maintain a separate brand.
Extensions are often responses to internal
questions such as: We have the customers, what
else can we sell them (Virgin)? Or, we have the
capabilities, what else can we make (GE)? Or,
we have the brand, where else can we market it
(Disney)? As soon as a company goes from a
single offering to a line of offerings, its in the
brand-portfolio business.

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There are two main models for organizing brand

portfolios. The first is a house of brands, meaning a company that markets a range of separate
brand names. Here the individual brands are
given the spotlight, while the company stays
behind the scenes (Procter & Gamble). The
second model is a branded house, meaning
that the company itself is the brand, and its products or services are subsets of the main brand.
(Hewlett-Packard)
The advantage of a house of brands is that
each brand is free to fight its battles on its own
terms, unfettered by the meaning of the parent
brand. The disadvantage is that each brand must
be funded, built, and managed separately.
The advantage of a branded house is that all
the products and services can share the same
budget, customers, and market position. The disadvantage is that all the offerings wont benefit
equally from the company brand, and competitors
will easily outmaneuver offerings that are saddled
with strategically weak meanings.

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House of brands

Either model can be highly effective, depending

on the industry, the competitive situation, and the
company vision. The least effective model is one
that mixes the two models, leaving the portfolio
stuck in the muddy middleneither a house of
brands nor a branded houseonly to fade into
obscurity as focused brands run off with customers.
Both models require careful management, so that
each brand and subbrand has a well-defined role
to play in the overall lineup. Looking at brands
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branded house

tion and inefficiency, says David Aaker of Prophet.

Read his book BRAND PORTFOLIO STRATEGY for a
thorough treatment of the subject.
Back at Bibli, the founders are thinking ahead.
If they manage to create a profitable business,
how will they extend their success? By building
a worldwide community of wine appreciation in
which customers actively recruit more customers?
By selling their private-label wines in stores? By
taking the business model to other countries where
people are curious about wine?

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Checkpoint 17: HOW DO YOU PROTECT YOUR PORTFOLIO?

The era of the stand-alone brand is coming to a

close, as more and more companies understand
the value of linking brands together. While theres
valuable synergy to be found in brand portfolios,
however, they face four dangers that single brands
dontcontagion, confusion, contradiction, and
complexity.
CONTAGION , the first of the four, is the dark side
of synergy. Just as customer loyalty can spread
quickly through brand linkages, so can bad news.
If one brand has a problem, depending on the
strength of the ties between the brands, the rest
of the portfolio can become infected. For example,
a number of years ago 60 MINUTES aired a story
on the Audi 5000s tendency toward sudden acceleration, an untrue claim that spread like a forest
fire through the media, the culture, and the courts.
It ruined the reputation not only of the 5000, but
of ALL the Audi models. It took years for Audi to
restore luster to its brand.

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DESIGNING YOUR ZAG

By contrast, if the same fate were to befall Mini

Cooper next year, its parent company BMW would
suffer less damage. By building a separate brand
for Mini, the company in effect has built a firewall
between the two brands.
Thus, the choice between building a brand
portfolio or stand-alone brand involves the trade-off
between synergy and safety.
While CONFUSION isnt as dramatic as contagion, its much more common. It happens when
companies extend their brands past the boundaries their customers draw for them. I may love Crest
toothpaste, but now that there are 17 varieties of
Crest, Im not sure what Crest means anymore.
Rather than deal with my confusion, I may switch
to Toms Natural. At least I know what Tom stands
for. Customers want choice, but they really want it
AMONG brands, not WITHIN brands.
Brand confusion can be avoided by understanding the trade-off between stickiness and
stretchiness. Stickiness is a brands ability to own
a distinct meaning in peoples minds. Stretchiness
is its ability to extend its meaning without breaking.

DESIGNING YOUR ZAG

109

section title

For example, Dyson is closely identified with

expensive, brightly colored, high-design vacuum
cleaners. The brand has a high degree of stickiness in its subcategory. If Dyson were to add a
line of expensive, brightly colored, high-design
wristwatches, however, the brand could eventually
forfeit its position in vacuum cleaners. Equally
dangerous, if Dyson decided to stay with vacuum
cleaners but market an inexpensive version alongside its original expensive version, the company
would eventually find that its brand was defined
by the low end, not the high end. The high end
would then be vulnerable to a more focused competitor. Not only does stickiness limit stretchiness,
but a downward stretch pulls perceived value
down with it.
Of course, the temptation to stretch is nearly
irresistible. Companies need to grow, and in the
short term most brand extensions make money.
In the long term, however, extensions can cripple
a brand by confusing customers. Viewed through
the lens of systems thinking, it would look like
this: 1) the company needs revenue growth,
2) so it adds brand extensions, 3) which increase
revenues in the short term, 4) but in the long term

D
t

DESIGNING YOUR ZAG

unfocus the brand, 5) which leads to decreased

revenues, 6) which leads to a need for revenue
growth, and around and down it goes. This is the
brand-extension doom loop. The way to avoid it
is through focus and long-term thinking.
CONTRADICTION can occur when a company
tries to extend a brand globally. Since brands are
defined by customers, not companies, customers
in one culture may have a different view of a
product or company than customers in another
culture. The Disney brand, for example, may signify wholesome entertainment in one culture,
American entertainment in another culture, and
cultural imperialism in another. By extending its
brand portfolio geographically, Disney risks cultural
backlash from contradictory meanings.
One way to avoid contradiction is to build a
separate brand for each culture, with a different
name and a different set of associations for each.
Another way is to focus a global brand on a
common denominator. Hewlett-Packards Invent
position allowed it to travel easily around the world
without contradiction or cultural backlash.
The last danger is COMPLEXITY. As a brand
portfolio grows, what began as a way to simplify

112

DESIGNING YOUR ZAG

the brand-building process often ends up complicating it. Multiple segments, multiple products,
multiple extensions, different competitive sets,
and complex distribution channels can easily
create an overgrown, hard-to-manage, inefficient
brand portfolio. while the human mind is better at
addition than subtraction, subtraction is the key to
building strong portfoliospruning back brands and
subbrands that dont support your zag.
Managing a portfolio requires establishing clear
roles, relationships, and boundaries for brands.
it requires the sacrifice of lucrative revenue streams
that unfocus the portfolio. and it requires a strong
sense of what customers will allow the brand
to be. as provocative as it sounds, said CEO
Helmut Panke of BMW, the biggest task in brandbuilding is being able to say no.
finally, the wine bar is ready to launch. the
founders are confident about the clarity, direction,
and market potential of their zag. while they still
have many decisions to make, they now have a
powerful decision-making tool to keep their brand
aligned and their business profitable for many
years to come.
salud!

Designing yoUR Zag

Part 3 : RENEWING YOUR ZAG

SCISSORS, PAPER, ROCK.

If youre launching a new brand, as in the wine bar

example, you can stop reading hereyou have
enough information to start the zag-design process.
But if youre repositioning a brand, or if youre curious about where to take your brand after you launch
it, this section of the book will help you understand
how and when to renew your zag as it moves
through the three stages of the competition cycle.
Whenever I give a workshop on brand positioning, I can count on getting this question: If focus
is so important to success, how can so many unfocused companies grow so large? In other words,
how can you explain the success of a company
like General Electric, which markets everything
from power plants to plastics, insurance to entertainment, and lightbulbs to light rail systems? Or
Mitsubishi, which puts its name on 23,720 offerings
from automobiles to aerospace, textiles to tobacco,
and banks to broccoli?
The fact is, as powerful as the principle of focus
is, companies with different degrees of focus can
coexist in the marketplace. Perhaps the easiest
way to understand how this can happen is through
the childrens game of scissors, paper, rock.

Renewing YOUR ZAG

115

Remember how it goes? Scissors cuts paper,

paper covers rock, rock breaks scissors. Each
position has its strengths and each has its weaknesses, creating a balanced cycle of competition.
Business history suggests that companies
thrive best when they settle into stable states,
conditions in which the business environment is
fairly predictable and employees have confidence
in what theyre doing. In self-organization theory
the part of chaos theory that studies how order
seems to arise spontaneously in complex systemsthese stable states are called attractors.
As a company grows, its attracted toward one
of three main states, which we can call scissors,
paper, and rock.
A scissors company is a startup or small business, often having only one brand. What distinguishes a scissors company is its extremely sharp
focus. It competes by cutting out a small area of
business (white space) from the market dominated
by much larger paper companies, who are either
too busy to notice or too slow to respond.
As a scissors company becomes successful
and begins to grow, it morphs into a rock company, a medium-sized organization that typically

116

Renewing YOUR ZAG

has more brands and less focus. Its defining

characteristic is no longer focus but momentum.
Rock companies thrive by crushing scissors
companies, who dont have the resources to
compete head to head with them.
As a rock company grows, its momentum
begins to fade, and eventually it turns into a
paper company. What distinguishes a paper
company is its sheer size. With even more brands
and even less focus, it survives by using its network and resources to smother rock companies.
And round and round they go.
There are three observations you can make
about the competition cycle: 1) companies tend
to grow clockwise, from scissors to rock to paper;
2) they tend to compete counter-clockwisepaper
covers rock, rock breaks scissors, scissors cuts
paper; and 3) the spaces between the stable
states are unstable statesperiods of time when
change is not only possible but necessary. Its
during these unstable periods that companies
often need to reposition their brands.
Now lets look more closely at the ways each
type of competitor can maximize its particular
advantage.

RENEWING YOUR ZAG

117

Growth Direction

118

RENEWING YOUR ZAG

Competing Direction

RENEWING YOUR ZAG

119

THE FOCUS OF SCISSORS.

In the book THE INNOVATORS SOLUTION , Clayton

Christensen and Michael Raynor divide innovation
into two typessustaining innovation, which calls
for incremental improvements to existing offerings,
and disruptive innovation, which attempts to find
new market space, often with products or services
that are less expensive and initially perceived
as not good enough. Its their focus on a disruptive
innovation that allows scissors companies to
outmaneuver paper companies.
So why dont paper companies counter-attack
with disruptive offerings of their own? Because of
asymmetric motivation. When a company moves
upmarket, much of the incremental revenue falls
to the bottom line. When a company moves downmarket, little of the incremental revenue falls to the
bottom line. Large companies cant make enough
profit on emerging markets, so they pass.
An example of disruptive innovation is eBay, a
company that became the worlds online market
place before the world thought it needed one.
eBay thrived in the scissors state for the better
part of a decade. Notes CEO Meg Whitman,Young
companies are very well served by focusing.

120

THE MOMENTUM OF ROCK.

As growth opportunities become clear, scissors

companies move through the first unstable state
on their road to rock. They may think about adding
brands or subbrands, or acquiring other companies. Process begins to replace passion as they
codify what worked in the early years. They may
consider going public during this period, or bringing
in professional managers.
When they do reach rock, they suddenly
become dangerous to paper companies, who had
paid little attention to them. The paper companies
are now motivated to smother the rock companies
by matching any new offeringsofferings that may
be less disruptive and more like what the paper
companies can profit from.
If scissors companies go public during the
transition, their momentum may increase with the
sudden infusion of cash, but it will soon be tempered
by rising levels of risk aversion, as shareholders
pressure management for ever-increasing earnings.
Yet rock companies have a tremendous natural
advantage: The big mo allows them to enter new
markets, attract world-class talent, and buy up the
scissors companies they used to compete with.

RENEWING YOUR ZAG

THE SIZE OF PAPER.

Eventually, a rock companys momentum slows,

and it passes through a second unstable state
on its way to becoming paper. The biggest challenge the company faces during this transition is
keeping the growth engine running. By now it has
probably made some serious mistakes and may
have lost a great deal of its original fire and focus.
If the founder is still in charge, this will be the
most likely time for a change of leadership.
The first thing the new leader must do is refocus the business and win back the confidence of
shareholders. He or she will reduce head count,
prune back unprofitable lines of business, and
remodel the brand architecture. While the company
will never regain the sharp focus of a scissors
company, whatever it lacks in focus it makes up
for in size. With size comes a broad network of
customers, partners, distributors, and employees,
plus access to large reservoirs of capital.
Just as scissors companies achieve the quickest success with disruptive innovation, paper
companies tend to achieve it with sustaining innovation. They win by making incrementally better
products that can be sold for higher prices to

122

RENEWING YOUR ZAG

attractive customers. Meanwhile, with rock companies breathing down their necks and scissors
companies attacking them through the niches, paper
companies are under constant pressure to grow
even larger in self-defense.
Theres strong evidence, however, to suggest
that every company has its maximum size, beyond
which it cant grow profitably. At that point it tends
to renew itself by completing the cycle of competitionby fueling the next scissors generation. It
refocuses, spinning off lines of business into smaller companies. It downsizes, scattering talented
managers like seeds into niche businesses. And it
discontinues investments in innovations that arent
likely to pay off big enough or soon enough. All of
which refreshes the bottom line, and all of which
feeds the success of scissors companies.
What can you do with paper-scissors-rock? Tons.
Seeing where you fit in the competition cycle lets
you 1) exploit your companys strengths and minimize its weaknesses; 2) exploit your competitors
weaknesses and better prepare for their attacks; 3)
use the unstable states to reinvent your zag; and
4) renew your zag during the stable states to block
a competitive move or simply remain vital.

RENEWING YOUR ZAG

HOW STRUCTURE BECOMES STRICTURE.

A business is a cultural organism. It grows and

develops by creating processes and embracing
values that formalize what generated past successes, so that employees can work more auto
nomously. These form the mental models, the organ
izational rules, that define a companys culture.
But when mental models go unquestioned,
the culture stiffens. The company finds it increasingly difficult to react to challenges that dont fit its
worldview. This is what Lou Gerstner found when
he took over IBM in the 1990s: Successful institutions almost always develop strong cultures that
reinforce those elements that make the institution
great. In fact, this becomes an enormous impediment to the institutions ability to adapt.
This cultural lock-in results in an inability to
change, even in the face of clear market threats.
When a companys capabilities reside in its
people, changing to meet these threats is fairly
simple. But when its capabilities reside in processes and values, lock-in happens and change
becomes difficult. The chains of habit, said
Samuel Johnson, are too weak to be felt until
they are too strong to be broken.

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RENEWING YOUR ZAG

section title
RENEWING
YOUR ZAG

2141

UNLOCKING YOUR ZAG.

Gerstner was successful in transforming IBM

from a seller of big iron to a leader in technology
services because he was able to address the central problem of brand-building: How do you get a
complex organization to execute a simple idea?
Of course, first you have to get a simple ideaa
zag. Second, you have to use generative learning
rather than simple learning to change the way
the business operates. Simple learning is learning
how to do the same thing better. Generative learning is learning how to do new things. Most of all,
said Gerstner, it requires that the organization do
something different, value something more than
it has in the past, acquire skills it doesnt have.
Organizational theorist James March argues
for an influx of the nave and ignorant to jumpstart generative learning. He warns that groups
become progressively blind to opportunity when
they spend too much time exploiting and too little
time exploring.
In the exploiting mode, groups focus on making
money now by driving out variance and replicating
the past. In the exploring mode, they focus on
making money later and breaking from the past.

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RENEWING YOUR ZAG

By recruiting fresh blood, a company can introduce

people who have no allegiance to the way we do
things around here.
Mental models come in two flavorsthose that
make life easier by solving problems, and those
that make life difficult by creating stuck situations.
The mental models of a mature organization
will act like an elastic netwhen you pull one
piece out of position it will stay that way as long as
you exert pressure. As soon as you let go, it will
snap back in place. Yet change can be surprisingly
easy when you identify the right place to achieve
leverage. To find the leverage point in your organization, just ask these three questions:
1. What is stopping the change?
2. How is that a problem?
3. What would have to happen for it NOT to
be a problem?
Theres a myth that people in organizations dont
like change. Actually, people do like change. What
they dont like is BEING changed. When you find
your zag, ask your people how theyll help to execute it. Youll be surprised by the amount of energy
you release.

Renewing YOUR ZAG

127

SIMPLE LEARNING
IS ABOUT DRAWING THE
SAME BOX BIGGER.

130

RENEWING YOUR ZAG

GENERATIVE LEARNING
IS ABOUT DRAWING A
WHOLE NEW SHAPE.

RENEWING YOUR ZAG

131

WHEN GOOD SHAREHOLDERS GO BAD.

At the Hudson Highland Center for High Perfor

mance, Susan Annunzio defines a high-performance company as one that makes money by
developing new products, services, and markets.
The biggest impediment to high performance,
she says, is short-term focus. Short-term focus is
often a reaction to the demands of shareholders,
who are quick to sell off non-performing stocks.
But non-performing stocks and non-performing
companies are two different things.
The HARVARD BUSINESS REVIEW studied 275
companies over 11 years, dividing the companies
into those that customers felt had become more
differentiated and those that had become less
differentiated. The more-differentiated companies
realized a stock gain of 4.8% on the year; the
less-differentiated companies a loss of 4.3%. Not
only that, but the changes in stock price showed
up ONE YEAR AFTER the changes in differentiation.
In other words, customers saw right away what
shareholders only saw after seeing the earnings.
Shareholders who are unaware of the relationship between zagging and performance are driving
the bus from the back seat.

130

Renewing YOUR ZAG

THE NEW PRIME DIRECTIVE.

CEOs are beginning to question the prime directive of creating shareholder value at the expense
of other values. Theyve seen the slippery slope: 1)
incremental investments dont produce fast growth,
2) shareholders devalue the stock, 3) the leaders
are fired, 4) the new leaders cost-cut their way back
to earlier earnings levels, and 5) the company is
once again searching for fast growth.
Annunzio admonishes CEOs to stand up to
the investment community and tell them that companies cant cut their way to sustainable growth.
Instead, they should differentiate their products
and seize opportunities in new markets.
Recent studies offer ammunition. Companies
with 80% of their revenue from innovative products
have typically doubled their market share in a fiveyear period. The top 20% of the most innovative
companies have achieved double the shareholder
returns of the 80% less innovative companies.
And companies that have radically transformed
their brands through differentiation have enjoyed
tangible results, and stock prices have risen
250% a year as theyve revived.
The new prime directive is zagging.

Renewing YOUR ZAG

131

A TWO-STAGE ROCKET.

When cultural lock-in persists, a company may find

itself in the same situation as Sears. Sears was
once the leader in mail order, selling thousands of
useful items through information-packed catalogs.
To this day, many people believe that Sears is
the best company for tools, appliances, and other
practical products. Not satisfied with this position,
however, Sears expanded from mail order sales to
department stores, eventually asking customers to
stretch their view of the brand to include insurance,
a portrait studio, and the softer side of Sears. Today
the company is limping slowly toward oblivion.
Sears missed its big opportunity in the 1990s
when it could have radically transformed itself by

132

THE OLD BUSINESS

THE OLD BUSINESS

BEGINS TO LOSE ITS

DROPS AWAY AND THE NEW

ORIGINAL MOMENTUM.

BUSINESS TAKES OFF.

RENEWING YOUR ZAG

returning to its mail-order roots, once again becoming Americas most trusted storeonline. Instead,
that honor went to Amazon.
When a company needs to get itself from a
dying market to an emerging one, the best vehicle
may be a two-stage rocket. Like launching a
rocket, a new brand can use up half its fuel just
escaping gravity. With this strategy, the company
uses the first stageits existing brandto fuel
the second stagethe new brand. By reducing
investment in the old brand, and by selling off
assets it no longer needs, the company can free
up resources to launch the new brand.
Kodak has recently launched a two-stage
rocket to complete its journey from the world of
film images to the world of digital images. The
company has halted its investment in film, and is
now using the declining profits from the old cash
cow to fund the new digital brand. It could have
gone further by creating a new brand name for
the digital company and reserving the Kodak name
for use in the trade. A new brand name would have
established the first major camera brand designed
for the digital world from the ground upa much
more buzz-worthy zag.

RENEWING YOUR ZAG

133

ZAGGING AT THE SPEED OF CHANGE.

I began this book by citing Moores Law, the 1965

prediction that computer speed would dramatically
increase every year. Id like to end it with Warhols
Law, artist Andy Warhols 1968 prediction that
everyone will be famous for 15 minutes. Warhols
Law is based on the observation that mass media
are becoming atomized, democratized, and personalized, not only allowingbut requiringmore
people to feed the media machine. This phenomenon is inextricably linked with the big speedup,
since constant change requires constant novelty.
Were moving into an era of perpetual innovation.
As choices in the marketplace proliferate, the
lifetime of a brand will shrink. Disk-drive pioneer
Al Shugart was only half-joking when he said,
Sometimes I think well see the day when you
introduce a product in the morning and announce
the end of its life in the evening. The day is almost
here. The journey from innovation to commodity is
often so short that theres barely time to capitalize
on it. What happens is that, while a company is
betting its future on the success of its last product
or service, other companies are busy launching
the next product or service. Thus the market as a

134

RENEWING YOUR ZAG

whole tends to move faster than any one company.

In the big casino of the marketplace, the house
usually wins.
So how can your company beat the house?
Only by innovating at the speed of the market.
To do this youll need to shorten the span between
invention and introduction. Youll need to launch
white-space brands while core brands are still
performing. Youll need to organize the company
around brand collaboration. Youll need to beat
marketplace clutter instead of adding to it. And
youll need to build a culture that thrives on
radical differentiation.
According to a recent survey of CEOs, todays
top three business goals are: 1) sustained and
steady top-line growth, 2) speed, flexibility, and
adaptability to change, and 3) customer loyalty and
retention. Most of the CEOs said theyd be satisfied with any two of these. My advice? Be different.
Go for all three with a brand that zags.

RENEWING YOUR ZAG

If youre not zagging,

1521

RENEWING
section
YOURtitle
ZAG

youre lagging.

section
RENEWING
title
YOUR ZAG

2153

Where do you
have the most
credibility?

Where do you
have the most
experience?

THE 17-STEP
PROCESS

where does your

passion lie?

WHAT BUSINESS
ARE YOU IN?

Who are
you?

What do
you do?

Write a future
obituary for
your brand

DECIDE WHAT YOUR

PURPOSE IS, BEYOND
SELLING A PRODUCT
OR SERVICE

State your purpose

in 12 words or less

138

the 17-step process

What trend
is powering your
business?

What do you want

to accomplish in 5, 10,
or 20 years?

How powerful is it?

Who else
competes in your
category?

how can you make

this vision palpable
and exciting?

Can you ride

more than one
trend at a time?

Who comes first,

second, and third in
customers minds?

Whats your
vision?

What wave are

you riding?

Who shares the

brandscape?

Paint a vivid picture

of your future

Make a list of
the trends that
will power your
success

Find out how

your brand ranks
with customers

Test it on
a real piece of
communication

Design a
strategy to become
number one or two

Go back and
refine it further

or, become the

first mover in a
new category

Use it repeatedly
to illustrate
thE direction of
your business
139

What existing brand

elements are undermining your onliness?

What new brand

elements could
strengthen your
onliness?

Who makes up your

brand community?

Whats the one thing

that makes your
brand both different
and compelling?

How do the
remaining elements
align with your
vision?

How can you manage

the gives and gets
so everyones happy?

What makes
you the only?

What should
you add or
subtract?

Who loves
you?

Complete a simple
onliness statement

Make a list of all

current and planned
offerings and brand
elements

diagram your
brands ecosystem

Add detail by
answering what,
how, who, where,
when, and why

decide which
offerings to keep,
sacrifice, or add

Decide how each

participant will both
contribute and benefit

Be brutalits
better to err on the
side of sacrifice

140

the 17-step process

Is your name
helping or hurting
your brand?

If its hurting, is
there an opportunity
to change it?

If its too late

to change it,
is there a way to
work around it?

Which competitor
can you paint as the
bad guy?

is it suitable for
brandplay? Does it
have creative legs?

Whats the one

true statement you
can make about
your brand?

10

11

Whos the
enemy?

What do they
call you?

How do you
explain
yourself?

Tell your customers

what youre NOT, in
no uncertain terms

Choose a name thats

different, brief, and
appropriate

CRAFT A TRUELINE
THAT TELLS WHY YOUR
BRAND IS COMPELLING

Make sure its

easy to spell and
pronounce

avoid any COMMAS

or ANDS

Find out if the name

can be used as a URL

TURN YOUR TRUELINE

INTO A TAGLINE TO USE
WITH CUSTOMERS

Determine how
easy or difficult
it will be to
legally defend
the 17-step process

141

How will customers

learn about you?

HOW CAN YOU UNPACK

YOUR NAME, TRUELINE,
AND TAGLINE?

How can you enroll

them in your brand?

HOW CAN YOU ENROLL

BRAND ADVOCATES
THROUGH MESSAGING?

What are you

selling and how are
you selling it?

who will be your

competition at each
touchpoint?

HOW CAN YOU ALIGN ALL

YOUR COMMUNICATIONS
WITH YOUR ZAG?

Which touchpoints
will let you compete
in white space?

where should you

put your marketing
resources?

12

13

14

How do
you spread
the word?

How do
people engage
with you?

What do they
experience?

MAKE SURE
YOUR MESSAGING
IS AS DIFFERENT
AS YOUR BRAND

Map your value

proposition against
those of your
competitors

Map the customer

journey from nonawareness to full
enrollment

ONLY COMPETE AT
THE TOUCHPOINTS WHERE
YOU CAN WIN

See which competitive

areas you can avoid
entirely

Bet your resources

on the experiences
that zag

Discover customer
touchpoints where
youll be unopposed

142

the 17-step process

HOW CAN YOU

HELP CUSTOMERS
BUILD BARRIERS TO
COMPETITION?

HOW CAN THE

WHOLE BE WORTH MORE
THAN THE PARTS?

HOW CAN YOU AVOID

CREATING A
DISLOYALTY PROGRAM?

HOW DO YOU KEEP

GROWING THE BRAND
YEAR AFTER YEAR?

HOW CAN YOU STAY

FOCUSED UNDER SHORTTERM PROFIT PRESSURE?

15

16

17

How do you
earn their
loyalty?

How do you
extend your
success?

How do you
protect your
portfolio?

START BY BEING LOYAL

TO CUSTOMERS

Choose between a
house of brands and a
branded house

AVOID C-SICKNESS
CONTAGION, CONFUSION,
CONTRADICTION, AND
COMPLEXITY

DONT MAKE
NEW CUSTOMERS
FEEL PUNISHED OR
EXCLUDED

Add EXTENSIONS
THAT reinforce THE
BRANDS MEANING

UNDERSTAND THE
LONG-TERM EFFECTS OF
BRAND EXTENSIONS

GIVE LOYAL
CUSTOMERS THE TOOLS
TO INTRODUCE NEW
CUSTOMERS

AVOID EXTENSIONS
THAT UNFOCUS THE
BRANDS MEANING

AVOID EXTENSIONS
THAT BRING YOU
INTO COMPETITION
WITH LEADERS
the 17-step process

143

take-home lessons

If youd like a quick recap, heres a summary

of the ideas covered in ZAG . Sprinkle liberally
throughout your brand presentations, or try
adding a different one to the bottom of each
business e-mail you sendyou may be surprised
by the conversations youll start.
Marketplace Clutter

As the pace of business quickens and the

number of brands multiplies, its customers,
not companies, who decide which brands live
and which brands die.
Todays real competition doesnt come from
other companies but from the extreme clutter
of the marketplace.
Fighting clutter with more clutter is like trying
to put out a fire with gasoline.
A brand is a customers understanding about a
product, service, or company. Its not what you
say it is, but what they say it is.

take-home lessons

145

A
 n over-abundance of look-alike products and
me-too services is forcing customers to search
for something, anything, to help them separate
the winners from the clutter.
The human mind deals with clutter the best way
it canby blocking most of it out. Whats left,
the stuff that seems most useful or interesting,
gets labeled and stored in mental boxes.
For the first time in history, the barriers to competition are not controlled by companies, but by
customers. The boxes they build in their minds
are the boundaries of brands.
T
 he goal of branding is simple: to delight customers so that MORE people buy MORE things
for MORE years at a HIGHER price.
C
 ustomers today dont like to be soldthey
like to buy, and they tend to buy in tribes.
In a marketplace of me-too offerings, people
choose on the basis of tribal identity. If I buy
this product, what will that make me?

146

take-home lessons

T
 he demise of traditional advertising has two
causes: 1) People dont like one-way conversations, and 2) people dont trust advertisers.
W
 hat people want today are trustworthy brands.
What they dont want is more intrusiveness,
more empty claims, more clutter.
In a world of extreme clutter you need more
than differentiation. You need RADICAL differentiation. The new rule: When everyone zigs, zag.

Finding your zag

T
 o find a zag, look for ideas that combine the
qualities of GOOD and DIFFERENT .
Artists are trained to see negative space.
Companies need to think like artists when
theyre looking for new market space, because
new market space, or white space, is the
secret to finding a zag.

take-home lessons

147

W
 hen youre searching for a need state, dont
think so much about the unbuilt product as
about the unserved tribe. Look for a job people
are trying to do, then help them do it.
Designing your zag

Y
 ou need to clarify what business youre in
your core purpose. Core purpose is the
fundamental reason your company exists beyond
making money.
T
 he leaders job is to shape and articulate the
vision, making it palpable, memorable, inspiring.
True vision leads to commitment rather than
compliance, confidence rather than caution.
Without a clearly drawn vision, employees tend
to work at cross-purposes, often taking refuge in
functional silos instead of collaborating to transform a shared picture of the future into reality.
The power laws that control brand leadership
can be reduced to a simple formula:
first mover + popularity = leadership.

148

take-home lessons

W
 hen focus and differentiation are powered by
a trend, the result is a charismatic brand that
customers wouldnt trade for love nor money.
Its the difference between paddling a surfboard
and riding a wave.
While virtues like being innovative, responsive,
and customer-focused are admirable, zagging
requires that a company define itself by what
makes it UNIQUE , not what makes it admirable.
B
 rands are subject to what network theorists
call power lawslaws that explain why
success attracts success, or why the rich
get richer.
In the world of power laws, market-share
hierarchies are controlled by customers,
who collectively determine the success
order of competitors.
An onliness statement provides a framework
for your zag: Our brand is the ONLY _________
that _________ .

take-home lessons

149

B
 y checking any new business decision against
your onliness statement you can quickly see
whether it will help or hurt, focus or unfocus,
purify or modify the meaning of your brand.
One of the most powerful principles in building
a brand is focused alignment. The result of
alignment is coherence; the result of non-alignment is wasted resources.
If adding an element to your brand brings
you into competition with a stronger competitor,
think twice. You may well end up wasting
energy and confusing your customers.
A
 brand is part of an ecosystem in which each
participant contributes and each participant gains.
Rather than trying to please everyone at the
risk of pleasing no one, step right up and pick a
fight. Just make sure you take on the biggest,
most successful competitor you can find.

150

take-home lessons

Its an ironic fact of marketing that a brands

most valuable asset is often the one given the
least attention: its name. A poor name is a drag
on the brand building process, and a good name
accelerates it.
A name should be: 1) different than its competitors,
2) brieffour syllables or less, 3) appropriate, but
not so descriptive that it sounds generic, 4) easy
to spell, 5) satisfying to pronounce, 6) suitable
for brandplay, and 7) legally defensible.
A
 ll brand communications should emanate from
a trueline. A trueline is the one true statement
you can make about your brand. Its your value
proposition, the reason your brand matters to
customers. It cant be reduced, refuted, or
easily dismissed.
T
 he key to crafting a trueline is to focus on a
single proposition. If you find yourself using
commas or ands to write your trueline, you
may need more focus.

take-home lessons

151

A
 marketing budget based on zagging
will appear much larger than it actually is.
The object is to compete where you can win.
F
 orget about best practices. Best practices are
usually common practices. And common practices will never add up to a zag, no matter how
many of them you apply.
Without good execution, a strategy is only a
planan intention. The road to hell is paved
with good strategy.
Customers experience your brand at specific
touchpoints, so choosing what those touchpoints
are, and influencing what happens there, is
important work.
Customer loyalty is not a program. It starts with
companies being loyal to customersnot the
other way aroundand only becomes mutual
when customers feel theyve earned the loyalty
theyre receiving from the company.

152

take-home lessons

If a brand has positive associations for cus

tomers, the company may be able to unlock
value by extending itbut only if the new extensions reinforce the meaning of the original brand.
While there is valuable synergy to be found
in brand portfolios, they face four dangers that
single brands dontcontagion, confusion,
contradiction, and complexity.
C
 ONTAGION is the dark side of synergy. If one
brand has a problem, the rest of the portfolio
can become infected.
C
 ONFUSION can happen when companies extend
their brands past the boundaries their customers
draw for them. Customers want choice, but they
usually want it AMONG brands, not WITHIN brands.

can occur when a company

tries to extend a brand globally. Customers
in one culture may have a different view of a
product or company than customers in
another culture.
C
 ONTRADICTION

take-home lessons

153

becomes a danger as a brand

portfolio grows. What began as a way to simplify
the brand-building process can easily end up
complicating it.
C
 OMPLEXITY

The key to building strong portfolios is subtractionpruning back brands and subbrands that
dont support your zag.
renewing your zag

A
 s a company grows, its attracted toward
one of three stable states, which we can call
scissors, paper, and rock. Each state has
its strengths and each has its weaknesses,
creating a balanced cycle of competition.
A scissors company is a startup or small business that competes by cutting out a small area
of business from a much larger paper company.
Its defining characteristic is extreme focus.
A scissors company grows into a rock company
that competes by crushing scissors companies.
Its defining characteristic is momentum.

154

take-home lessons

E
 ventually, a rock company expands into a
paper company that uses its superior network
and resources to smother rock companies.
Its defining characteristic is its size.
Focus beats size, size beats momentum, and
momentum beats focus.
C
 ompanies tend to compete counter-clockwise
paper covers rock, rock breaks scissors, scissors
cuts paper.
O
 ver time, focus grows into momentum, momentum broadens into size, size divides into focus...
and the competition cycle begins again.
T
 he spaces between the stable states are
unstable statesperiods when change is not
only possible but necessary. This is the natural
time to reinvent your zag.
Seeing where you fit in the competition cycle lets
you 1) exploit your companys strengths and minimize its weaknesses; 2) exploit your competitors
weaknesses and better prepare for their attacks;

take-home lessons

155

3) use the unstable states to reinvent your zag;

and 4) reinvent your zag during the stable
states to block a competitive move or simply
remain vital.
Theres a myth that people in organizations
dont like change. Actually, people do like
change. What they dont like is BEING changed.
To find the leverage point in your organization,
just ask these three questions: 1) What is stopping the change? 2) How is that a problem?
3) What would have to happen for it NOT to be
a problem?
T
 he central problem of brand-building is getting
a complex organization to execute a simple idea.
When you find your zag, ask your people how
theyll help to execute it. Youll be surprised by
the amount of energy you release.

156

take-home lessons

T
 he biggest impediment to high performance
is short-term focus. Short-term focus is often a
reaction to the demands of shareholders, who
are quick to sell off non-performing stocks.
Companies that have radically transformed
their brands through differentiation have
enjoyed tangible results, and stock prices
have risen 250% per year as theyve revived.
When a company needs to get itself from a
dying market to an emerging one, the best
vehicle may be a two-stage rocket. It can use
the first stageits existing brandto fuel the
second stagethe new brand.
 Warhols Law is inextricably linked with the
big speedup, since constant change requires
constant novelty. Were moving into an era of
perpetual innovation.
The market as a whole tends to move faster
than any one company. In the big casino of the
marketplace, the house usually wins.

take-home lessons

157

Recommended reading

BACKGROUND THE BRAND GAP ,

Marty Neumeier (New Riders/

AIGA, 2003). My first book on brand shows companies how to bridge the gap between business
strategy and customer experience. It defines
brand-building as a system that includes five
disciplines: differentiation, collaboration, innovation, validation, and cultivation. Like ZAG , its
designed as a whiteboard overviewa twohour read that can also serve as a reference tool.
Look for the second edition, which includes all
the definitions from THE DICTIONARY OF BRAND .

 THE DICTIONARY OF BRAND ,

edited by Marty
Neumeier (AIGA , 2004). This pocket-sized book
is only available through Amazon. Published
by AIGA, the professional association for design,
its the first book to regularize common brand
terms. To get agreement on the definitions, I
assembled an advisory council of ten thought
leaders from the fields of management, advertising, market research, business publishing,
and design.

 FASTER ,

James Gleick (Vintage, 2000). This

book is chock-full of facts that support something most of us understand intuitivelythat
the pace of life is speeding up. Gleick maintains
that our era of instant coffee, instant intimacy,
instant replay, and instant gratification is causing
what doctors and sociologists call hurry sickness. In Zag , I didnt use copious case studies
to support my point about the big speedup,
since Gleick has already done it here. Also,
my readers are in too much of a hurry.

 THE WORLD IS FLAT , Thomas

L. Friedman
(Farrar, Strauss and Giroux, 2005). As supply
chains go global, the barriers between countries,
cultures, haves, and have-nots begin to fall,
causing the pace of business to speed up and
the marketplace to fill with clutter and noise.
This is no doomsday book, howeverFriedman
gives encouraging advice on how we can adapt.

Recommended reading

159

  THE PARADOX OF CHOICE ,

Barry Schwartz
(HarperCollins, 2004). Conventional wisdom
says that more choice is better. Only up to a
point, says Schwartz, after which more becomes
less. Choice overload can cause us to secondguess ourselves, adopt unrealistic expectations,
and blame ourselves for any and every failure.
Instead of empowering us, excessive choice can
undermine us, leading in some cases to clinical
depression. A good book to read if your goal
is to reduce customer choicemarketplace
clutterinstead of adding to it.

POSITIONING: THE BATTLE FOR YOUR MIND ,

Al Ries and Jack Trout (McGraw-Hill Trade,

2000). Positioning started as a brochure in
the early 1970s, then grew into a book, and has
been continuously updated without ever losing
its salience. Ries and Trout pioneered the
concept of positioning, the Big Bang of differentiation which soon they expanded into a dozen
or more books, each viewing the subject from
a different angle. If you can grasp the simple
truths in this body of work, youll understand
what 90% of marketing people dontits
the customer, stupid!

 THE POWER OF SIMPLICITY, Jack

Trout and Steve

Rivkin (McGraw-Hill, 2000). Simplicity is always
a hard sell, which is why its so powerful in the
commercial world. It goes far to explain the
success of In-and-Out Burger, Google, the iPod,
and Post-It Notes. It may also explain why the
simplest advertising works best, and why ideas
that take more that a few words to describe
often fail in the marketplace. According to Trout,
reducing complexity is the number-one way to
streamline a business and maximize its profits.
Simple, really.

160

Recommended reading

  THE WISDOM OF CROWDS ,

James Surowiecki
(Doubleday, 2004). Surowiecki puts forward a
fresh thesisthat large groups of people are
smarter than an elite few, no matter how brilliant
the few might be. This discovery is particularly
useful in understanding why brands lead to customer tribes. Customers know that if they simply
follow the crowd, they wont go too far wrong.

FINDING YOUR ZAG BLUE OCEAN STRATEGY,

W. Chan Kim and

Renee Mauborgne (Harvard Business School
Press, 2005). A blue-ocean strategy is directly
analogous to radical differentiation. Its aimed
at discovering wide-open market space (blue
ocean) instead of going head to head with
entrenched competition (red ocean). The authors
tool for mapping a brands value curve against
those of competitors is especially useful for
adding clarity and rigor to big-picture thinking.

 DIFFERENTIATE OR DIE ,

Jack Trout and Steve

Rivkin (John Wiley & Sons, 2000). Trout has
never been one to pull punches, and with
this book he and coauthor Rivkin give it to us
between the eyes. For those who need copious
examples and case studies before embarking
on a zag, this and Focus (see page 166) are
very good books. Did they say, Or die? Yow!

Recommended reading

LEADING THE REVOLUTION ,

Gary Hamel (Plume,

2000). Hamel issues a call to arms for would-be
revolutionaries, saying its not enough to develop
one or two innovative productsin the 21st
century you need to create a state of perpetual
innovation, not just with products but whole
business models. Once an innovation becomes
a best practice, he says, its potency is lost.
If its not different, its not strategic. Highly
recommended for provocateurs on every rung
of the corporate ladder.

161

PURPLE COW ,

Seth Godin (Portfolio, 2003).

The author likens a differentiated brand to a
purple cow. When driving through the countryside, the first brown cow gets your attention.
After ten or twelve brown cows, not so much.
Godin proves his point with innumerable examples from todays brandscape, and shows how
any company can stand out from the herd. He
also takes aim at advertising as usual, proclaiming the death of the TV-industrial complex. Its
time to mooove on, folks.

SIX THINKING HATS ,

Edward de Bono (Little,

Brown and Company, 1985). When executives
try to brainstorm the future of their organization,
the discussion can quickly turn to confusion and
disagreement. Edward de Bono, acknowledged
master of thinking skills, shows how to get the
groups best ideas by focusing on one kind of
thinking at a time. He organizes the session into
a series of hats, (red for emotions, black for devils advocate, green for creativity) so that ideas
arent shot down before theyre proposed. We at
Neutron have used this system with our clients
many times with gratifying results.

DESIGNING YOUR ZAG THE ART OF INNOVATION ,

Tom Kelley et al
(Currency/Doubleday, 2000). Kelley pulls back
the curtain at IDEO to reveal the inner workings
of todays premier industrial design firm. He
shows how the firm uses brainstorming and
prototyping to design such innovative products
as the Palm V, childrens fat toothbrushes,
and wearable electronics. Cool stuff!

 BUILDING THE BRAND-DRIVEN BUSINESS ,

Scott M.
Davis and Michael Dunn (Jossey-Bass, 2002).
Its all about controlling the touchpoints, those
places where customers experience the brand.
Davis and Dunn tell how to segment those experiences into pre-purchase, during-purchase, and
post-purchase, so that everyone in the organization knows their role in building the brand.

162

Recommended reading

BRAND PORTFOLIO STRATEGY ,

David A. Aaker
(Free Press, 2004). David Aaker has spent
more than a decade building a taxonomy of
brand theory, helping to define and categorize
all the dependencies needed for managing
brands. Here he turns his attention from single
brands to families of brands, showing how to
stretch a brand without breaking it, and how
to grow a business without unfocusing it.

D ESIGNING BRAND IDENTITY ,

Alina Wheeler
(John Wiley & Sons, 2003). A brand isnt truly
differentiated until its personality is made
visible through its identity materials. Wheelers
book presents winning examples of trademarks
and other graphic communications, and offers a
cogent description of how strategy and creativity
meet in the real world among world-class companies. An indispensable reference tool that sets
the bar where it should beextremely high.

THE 11 IMMUTABLE LAWS OF INTERNET BRANDING ,

Al Ries and Laura Ries (HarperBusiness, 2000).

While most people are still confused about how
to build brands on the Web, the Rieses (father
and daughter) log on with 11 new command
ments. Daringly counter-intuitive, the book
makes you question everything you know
about the Internet.

 EMOTIONAL BRANDING ,

Marc Gobe (Allworth

Press, 2001). Creating emotion, aesthetics, and
experience are the province of brand practitioners
like Gobe, who uses his companys portfolio to
illustrate and expand upon the work of David
Aaker and Bernd Schmitt, showing how logic and
magic are expressed in the practice of design.

Recommended reading

163

  EXPERIENTIAL MARKETING ,

Bernd H. Schmitt
(Free Press, 1999). The age of features-andbenefits marketing is over, says the learned
professor of marketing at Columbia Business
School. He trots out a range of case studies to
show how progressive companies are creating
holistic experiences for customers, building
their brands with sensory, social, and creative
associations. Schmitt provides the academic
underpinnings for any discussion of brand
as experience.

MANAGING BRAND EQUITY ,

David A. Aaker
(Free Press, 1991). Aaker fired the first salvo
in the brand revolution by proving that names,
symbols, and slogans are valuableand measurablestrategic assets. If youd like to begin
absorbing the lore of brand building, this is
the place to start. Youll learn why the words
business and brand are becoming inseparable.

MARKETING AESTHETICS ,

Bernd H. Schmitt and

Alex Simonson (Free Press, 1997). In this
precursor to EXPERIENTIAL MARKETING , Schmitt
and Simonson take Aakers thesis one step
further by showing that aesthetics is what
drives emotion. What makes a brand irresistable? What styles and themes are needed for
different contexts? What meanings do symbols
convey? The answers to these questions are
crucial in bridging the gap between business
strategy and customer experience.

164

THE MISSION STATEMENT BOOK ,

Jeffrey Abrahams
(Ten Speed Press, 1999). This is a handy
reference tool, since it contains 301 corporate
mission statements from some of Americas
best-known companies, including Johnson &
Johnson, Kelly Services, TRW, and John Deere.
The only time youll need it is when youre working on a mission statement, at which point it will
seem indispensable.

Recommended reading

 SELLING THE INVISIBLE ,

Harry Beckwith (Warner

Books, 1997). A veteran of advertising, Beckwith
takes on the toughest branding conundrum,
how to market products that people cant see
otherwise known as services. His follow-up book,
The Invisible Touch (2000), lays out the four
keys of modern marketing: price, branding, packaging, and relationships. Those who sell tangible
products would do well to master many of the
same principles: If you can sell the invisible, the
visible is a piece of cake. Both books are delightful and memorable.

A SMILE IN THE MIND ,

Beryl McAlhone and David

Stuart (Phaidon, 1996). If you wanted to buy only
one book on graphic design, this would be it.
Designer Stuart and writer McAlhone prove that
wit is the soul of innovation, using clever and
often profound examples from American and
European designers, plus a modest few pieces
from Stuarts own firm, The Partners, in London.

THE TEN FACES OF INNOVATION ,

Tom Kelley
(Doubleday, 2005). Kelley, from design mega-firm
IDEO , maintains that the idea-killing power of the
devils advocate is so strong that it takes up
to ten innovation protagonists to subdue him.
He offers the anthropologist, who goes into
the field to see how customers really live; the
cross-pollinator, who connects ideas, people,
and technology in new ways; and the hurdler,
who leaps tall obstacles that block innovation.

RENEWING YOUR ZAG BRAND LEADERSHIP ,

David A. Aaker and Erich

Joachimsthaler (Free Press, 2000). To be successful, says Aaker, branding must be led from
the top. This shift from a tactical approach to
a strategic approach requires an equal shift in
organizational structure, systems, and culture.
The authors prove their point with hundreds of
examples from Virgin to Swatch and from
Marriott to McDonalds.

Recommended reading

165

 BUILDING STRONG BRANDS ,

David A. Aaker
(Free Press, 1995). In this follow-up to MANAGING
BRAND EQUITY , Aaker acknowledges that many
companies brands are part of a larger system
of intertwined and overlapping brands and subbrands. He shows how to manage the brand
system to achieve maximum clarity and synergy, how to adapt to a changing environment, and
how to extend brand assets into new markets
and products.

BUILT TO LAST ,

James C. Collins and Jerry I.

Porras (1994, HarperBusiness Essentials).
Brands may not last, but companies can, say
Collins and Porras. The key to longevity is to
preserve the core and stimulate progress. Whats
the core of your business? Your values? Your
promise? This is the place where differentiation
must start, whether your company is a house of
brands or a branded house. The authors spent
six years on research, which gives the book a
certain gravitas.

 THE CIRCLE OF INNOVATION ,

Tom Peters (Vintage,

1997). Co-author of In Search of Excellence
and author of The Pursuit of Wow , Peters has
discovered the power of innovation, which he
calls a wildly unheralded business advantage.
Design is it! says Peters. An example of
innovative design itself, the book is a 10 on
the Richter scale, guaranteed to shake the
stuffing out of the stuffiest of stuffed shirts.

 FOCUS ,

Al Ries (HarperBusiness, 1996). Ries

(without Trout) argues cogently against misguided
line extensions that dilute the strength of the
brand. He shows how companies can evolve,
increase market share, and grow shareholder
value without undermining the focus that
brought the original brand to the dance.

166

Recommended reading

  THE FIFTH DISCIPLINE ,

Peter M. Senge (Currency,

1994). Senge brought systems thinkingwhat
he terms the fifth disciplineto the business
management dialogue. Other disciplines include
personal mastery and team learning. He encourages employees and managers to examine the
mental models that at first allow organizations
to codify their successes and later keep them
from evolving with the market. Senge offers
his own mental models, based on archetypal
systems thinking, to help companies look at
their businesses holistically.

THE INNOVATORS SOLUTION ,

Clayton M.
Christensen and Michael E. Raynor (Harvard
Business School Press, 2003). The authors show
how innovative companies can disrupt incumbents with products and services that seem not
good enough compared with those of competitors, while setting the table for future success.
They also show that large companies dont have
to sit idly by while scrappier upstarts reposition
their business. A seminal work.

 UNSTUCK ,

Keith Yamashita and Sandra Spataro,

PhD (Portfolio, 2004). When all else fails, get
UNSTUCK . This little book from a founder of
Stone Yamashita Partners and a professor of
organizational behavior is chock-full of tips and
tricks for improving collaboration. The authors
couple a highly visual communication style with
bite-size ideas (a little like ZAG ), to create a fun,
easy tool for jumpstarting your team. More inspirational than instructional, it allows the reader to
participate in the process.

Recommended reading

167

Many of the ideas in ZAG come from my experience

with Neutron, the branding think tank I founded
in San Francisco in 2003. Neutrons mission is to
help companies address the central problem of
brand-buildinghow to get a complex organization
to execute a simple idea. The field is bloodstained
with brands that couldnt crack this problem.
Of course, executing a simple idea starts by
HAVING a simple ideaone thats unique and
compelling. Our experience has been that when
a companys value proposition is simple, unique,
and compellingi.e., a zageverything else
becomes easier. Employees become more energetic, managers start to collaborate across silos,
customers find reasons to become evangelists,
other companies are more eager to partner, and
shareholders give the leaders more headroom.
These improvements, in turn, lead to marketspeed innovation, stronger customer connections,
and better operational efficiencies. Our role at
Neutron is to make sure these improvements are
predictable instead of accidental.
As you might expect, Neutron itself is a ZAG .
We discovered new market space by imagining
a role that didnt exist ten years ago: the job of
brand coach. As branding becomes more complex, companies are learning that it takes an
interdisciplinary team to build a brandnot
just one department or firm. Also, as branding
becomes more critical to success, companies
are feeling the pressure to manage their brands
from the inside. Neutron has become the go-to
firm for companies who believe brand management is too important to outsource.
How do we coach companies? Well, were
discovering new methods every day (since theres
no prefab model for a ZAG), but we start by doing

168

about neutron

about neutron

a lot of brainstorming in the areas of strategy and

design (think-tank stuff). We develop new models
(we call them conceptual toys) to help companies
understand how they might drive positive change.
And we develop the language, tools, and vehicles
needed to deliver these ideas in ways the
collaborative team can use (often within an
educational framework).
If youve ever worked in a company where
process overshadows purpose; where colleagues
dont collaborate; where decisions seem disconnected; where brand expressions get lost in
translation; where the spark of inspiration fizzles
before it reaches your customer; or where its just
no fun to come to the office, youve experienced
the uncomfortable gap between the spreadsheetdriven past and the brand-driven future. This is
the gap that Neutron and our clients are working
hard to close.
Find out more about Neutron at
www.neutronllc.com.

about neutron

169

170

Acknowledgments Where

do I start? Even though the book is brief,

it took hundreds of people to bring it to fruition.
At the front end there were many experts with
whom I consulted about content, and at the back
end there were many more who lent their skills
to publishing, manufacturing, and marketing. In
between, during the three years it took me to
research, write, and design the book, I received
guidance from many business thinkers who know
their terrain much better than I.
Dr. James Forcier, for example, gave me his
economists-eye view of barriers to competition.
Tim Calkins shared his circumstances that favor
the leading brand and other insights from the
brand strategy class he teaches at Northwestern
University. Ron Sanchez, PhD, a professor at
the Copenhagen Business School, clarified many
strategic issues for me in his workshop on strategic management processes. And Gary Elliott,
vice president of brand marketing at HP, helped
me to think more deeply about the relationship
between business strategy and brand building.
Id like to thank my old advertising buddy,
Garth de Cew, for the clever definition of branding
that graces pages 24 and 25. Also my friend and
former client, Peter Van Naarden, for helping me
articulate the vision for Bibliwe got so excited
that we nearly quit our day jobs to build a chain
of wine bars. The wine bar vision wouldnt have
been nearly as rich, however, without the previous
input of hundreds of talented people who attended
Neutrons branding workshops. Wonderful ideas.
Many thanks to my reviewers, including Brian
Collins of Ogilvy & Mather, Jonathan Copulsky of
Deloitte Consulting, Kip Knight of eBay, Rob Rodin
of RDN Group, Rod Swanson of Electronic Arts,
and Keith Yamashita of SY[P]. Thanks especially
to Greg Galle of C2, whose relentless demand for
a coherent story spurred me to work extra weeks
tying together the loose threads in
the narrative.
Also to my fellow authors for their warm support,
including Al Ries, the go-to expert on positioning;

Acknowledgments

Seth Godin, the author of more fresh ideas about

marketing than will fit on a shelf; and David Aaker,
who showed the world why branding is more than
identity, packaging, and advertising.
My sincerest thanks to Nancy Ruenzel and her
publishing team at Peachpit, including Michael
Nolan, who has championed my whiteboard overviews from day one, and the launch teamSara
Jane Todd, Scott Cowlin, David Van Ness, Brook
Farling, and Charlene Will.
I couldnt have produced a single page without
professional help. A crisp salute to my fellow
Neutrons, including Deanna Lee, Josh Levine,
Jennifer Murtell, Sue Smith, Laura Strojnowski,
and Tonje Vetlesetter for their fine work. Hats
off also to our Web team, Rob Bynder and Brad
Benjamin, for cracking the problem of how to
make a screen behave like a book (see www.
zagbook.com). Finally, a huge hug for Heather
McDonald, who took on the challenge of designing
the interior pages with grace and good cheer.
Im grateful for the use of Tim Bakers portrait
in front of Guss Pickles, a New York institution
since 1910. You can visit Tim, general manager,
and CEO Andrew Liebowitz, a fourth-generation
pickleman, at their newly expanded plant at
504A Central in Cedarhurst (left), New York, and
order shipments online at www.gusspickle.com.
Try their famous sour picklesyoull instantly
appreciate the value of specialization.
The actual writing of a book is a solitary activity,
requiring that the writer spend long hours at the
keyboardmostly at night and on maddeningly
sunny weekendsall the time fending off doubts
of ever finishing. During the process it helps
enormously to have a first-class support system.
Therefore the lions share of credit goes to my
wife Eileen, for offering more patience, encouragement, and respect than any husband deserves.
Finally, love to Mom and Dad, my bookends,
who have framed my life from left to right, top to
bottom, beginning to end.

Acknowledgments

171

index

BMW, 39, 113

Bohr, Niels, 39

Bowflex, 90

Aaker, David, 106107, 163, 164, 165, 166

Brand Gap, The (Neumeier), 47, 85, 159

Abrahams, Jeffrey, 164

Brand Leadership (Aaker and

acknowledgments, 170171
Adobe, 63
advertising. See also marketing
death spiral of, 2123

Joachimsthaler), 165
Brand Portfolio Strategy
(Aaker), 106107, 163
brand portfolios

differentiation in, 33, 45

complexity, 112113, 154

dynamics of good/different, 3437

confusion among, 109112, 153

modes of, 2425

advertising clutter

contagion among, 108109, 153

contradiction among, 112, 153

buyer selections and, 9

dangers of, 153154

defined, 78

organizing, 105107

Aeron chair, 35
Amazon, 133
American Association of Advertising
Agencies, The, 8

protecting, 108113, 143

branded house, 105107
branding, 25, 64
brands. See also designing your zag

Annunzio, Susan, 130, 131

brand alignment, 7275, 140

Anthropologie, 57

brand names, 8287, 141, 151

Apple, 81, 9193

circumstances favoring, 64

Apple Computer, 15

community ecosystem of, 7879

Aristotle, 54

customer experience and, 9699, 142

Art of Innovation, The (Kelley et al), 162

defined, 1819, 145

attractors, 116

defining, 4951, 138

Audi, 90, 108

enemies and principle of

Autodesk, 52

Avis, 81

extending and growing, 104107, 143

Axe Body Spray, 44

leadership among, 6064, 139

contrast, 8081, 141, 150

overcoming intellectual barriers

B

Beckwith, Harry, 165

power laws of, 6162, 148, 149

below-the-belt death spiral, 23

with, 1417

touchpoints, 9297

best practices, 95, 152

Brocade, 95

Bibli

Buffett, Warren, 49

brand portfolio strategy for, 107

Building Strong Brands (Aaker), 166

customer experience of, 9699

Building the Brand-driven Business (Davis

defining as a product, 9495

and Dunn), 100, 162

developing customer loyalty, 102103

Built to Last (Collins and Porras), 53, 166

finding zag with, 87

business

trueline for, 89

clarifying what you do, 5253, 138, 148

birth order, 61

defining vision, 5458, 138, 148

Blue Ocean Strategy (Kim and

focus in, 7071

Mauborgne), 95, 161

172

keeping up with change, 134135

index

maximum size of, 123

picking fight with, 81, 141, 150

need for innovation in, 2627

speed up in, 15

power laws and, 6162, 149

competition cycle

stable and unstable states, 116117

directions in, 118, 119

finding where you fit, 123, 155156

scissors, paper, and rock, 115118

C2, 50

Complexities of Choice (Carlberg), 9

Cadillac, 73, 74, 75

complexity

Carlberg, Glory, 9
change

reducing, 160
core purpose, 5354

asking people to execute, 127, 156

Creative Technology, 91

cultural lock-in and, 124

Crest, 109

keeping up with market, 134135

cultural lock-in, 124, 132

leveraging, 127, 156

customers

Chapstick, 90

branding and feelings of, 1819, 145

Charles Schwab, 35, 44, 90

brands and experience of, 9699, 142

checkpoints. See also designing

building barriers to clutter, 1417, 146

choosing products, 9

your zag
Christensen, Clayton, 41, 120, 167

customer experience, 9697

church and state, 23

defining product for, 9495, 142

Circle of Innovation, The (Peters), 166

earning loyalty, 7678, 100103, 140,

Cirque du Soleil, 35, 52

Citibank, 35, 65, 90

engaging with brand, 104107

clutter

responses to good/different

143, 152

advertising, 78

feature, 7

tribal identity of, 20, 146, 148

charts, 3439

intellectual barriers to, 1417, 146

marketing, 613, 145

media, 79

David and Goliath, 8081

message, 78

Davis, Scott M., 100, 162

product, 67

de Bono, Edward, 162

zag and, 92

Dean & Deluca, 57

Coca-Cola, 52

Dell, 40

Collins, Jim, 53, 166

Design Within Reach, 57

communications

Designing Brand Identity (Wheeler), 163

as element in checkpoint, 48

designing your zag

focusing purpose in, 53

about, 47

speedups in, 12

brand alignment, 7275, 140

spreading the word, 9193, 142

brand leadership, 6064, 139

community ecosystem of brands, 7879

building brand on customer

competition

experience, 9699, 142

among brands, 6064, 139

clarifying what you do, 5253, 138, 148

barriers to, 1417, 146

defining product sold, 9495, 142

marketplace clutter and, 613, 145

defining who you are, 4951, 136

onliness, 6568, 140, 149150

differentiation and, 6471

index

173

earning customer loyalty, 7678,

Faster (Gleick), 159

100103, 140, 143, 152

enemies and principle of contrast,

8081, 141, 150

extending brands, 104107, 143

Fifth Discipline, The (Senge), 54, 167

first-mover advantage, 61
focus

names of brands, 8287, 141, 151

adding/subtracting elements, 7879

overview, 148154

business size and, 7071

protecting brand portfolios,

as element in checkpoint, 48

108113, 143

high performance and short-term,

17-step process for, 138143

spreading the word, 9193, 142

scissor companies sharp, 116, 122

130, 157

trends, 5659, 139

size and momentum vs., 155

truelines and taglines, 8890, 141, 151

vision of business, 5458, 138, 148

vision and, 5458, 138, 148

Dictionary of Brand, The (Neumeier), 159

Focus (Ries), 166

Friedman, Thomas L., 159

Differentiate or Die (Trout and

Rivkin), 161
differentiation

G
Gaultier, Jean-Paul, 44

as element in checkpoint, 48

GE, 62, 104

enemies and principle of

generative learning, 126, 129

contrast, 8081, 141, 150

Gerstner, Lou, 73, 75, 124, 126

onliness tests for, 6569, 140, 149150

Gleick, James, 159

trends powered by focus and, 149

global brands, 112

uncertainty in innovation, 3439

Gobe, Marc, 163

zag and, 33, 45, 6471

Godin, Seth, 162

disloyalty programs, 101102

good/different charts, 3637

Disney, 53, 104, 112

Google, 1, 4950, 53

Disneyland, 90

growth direction in competition cycle,

disruptive innovation, 120, 122

118

Dunn, Michael, 100, 162

Dwell magazine, 40

dying markets, 132133, 157

Hamel, Gary, 161

Dyson, 111

Harley-Davidson, 66
Harvard Business Review, 130

hearts and dollar signs, 4243

Earthlink, 90

Heller Ehrmann, 90

eBay, 88, 89, 120

Hertz, 81

Edwards, A. G., 90

Hewlett-Packard, 105, 112

Emotional Branding (Gobe), 163

Hoo, Sim Wong, 91

enemies, 8081, 141, 150, 151

Hooters, 67, 90

executing change, 127, 156

house of brands, 105, 106107

experience, 9699, 142

hubs, 63

Experiential Marketing (Schmitt), 164

Hudson Highland Center for High

extending brand success, 104107, 143

Performance, 130
Hummer, 40

174

Index

IBM, 73, 81, 126

Managing Brand Equity (Aaker), 164

identification chips, 4

March, James, 126

innovation

marketing

Bohr on, 39

business, 2627

clutter in, 613, 145146

customer barriers to clutter, 1417

finding new trends, 44

differentiation in, 33, 45

good/different charts and, 3637

discovering product trends, 44

job-based, 41

finding new market space, 40, 147148

spreading the word, 9193, 142

Innovators Solution, The

Marketing Aesthetics (Schmitt and

sustaining and disruptive, 120, 122

dynamics of good/different, 3437

uncertainty in, 3439

(Christensen and Raynor), 41, 120, 167

Simonson), 164

intrusiveness death spiral, 22

markets

iPod, 44, 92

changes in, 134135

dying, 132133, 157

J

movement of, 157

jetBlue, 85

Mauborgne, Renee, 95, 161

Joachimsthaler, Erich, 165

McAlhone, Beryl, 165

jobs-based innovation, 41

McDonalds, 5

Jobs, Steve, 91

mental models, 124, 126127

Johnson, Samuel, 124

message clutter, 7, 8

junk brands, 49

Microsoft, 52, 63
Mini Cooper, 39, 88, 89, 109

Mission Statement Book,

Kaufman and Broad, 52

The (Abrahams), 164

Keeler, Wee Willie, 33, 45

momentum, 155

Kelley, Tom, 162, 165

Moore, Gordon, 1

Kellogs, 52

Moores Law, 1, 48, 134

Kent International, 73

muddy middle, 106

Kevlar, 56

Muzak, 40

Kim, W. Chan, 95, 161

Kodak, 133

N
names, 8287, 141, 151

Netflix, 40

Lafley, A.G., 41, 44

Neumeier, Marty, 47, 85, 159, 178

Las Vegas, 90

Neutron, 48, 168169

Leading the Revolution (Hamel), 161

Nike, 90

Lending Tree, 90
leveraging change, 127, 156
loyalty programs, 7678, 100103, 140, 143,
152

O
obituary exercise, 5051, 138
Ogilvy, David, 103
onliness, 6569, 140, 149150

Index

175

reputation, 19

Panke, Helmut, 113

Revlon, 107

paper companies

Ries, Al, 61, 160, 163, 166

in competition cycle, 116118

Ries, Laura, 163

competition from rock

Rivkin, Steve, 160, 161

companies, 121, 123

rock companies

Paradox of Choice, The (Schwartz), 160

perpetual innovation, 134

121, 123

Peters, Tom, 166

competition cycle and, 116118

Porras, Jerry, 53, 166

sustaining innovation and, 122

Positioning (Ries and Trout), 160

transition of scissor to, 121, 155

Post-Its, 40

Rodin, Rob, 2

competing with paper companies,

power laws, 6162, 148, 149

Power of Simplicity, The (Trout and
Rivkin), 160

S
sacrifice game, 7273

Procter & Gamble, 41, 44, 105, 106

Safeway, 101

products. See also brand portfolios

Samsung, 57

consumer responses to, 3637

discovering trends in, 44

finding new market space for,

40, 147148

Schmitt, Bernd H., 164

Schwartz, Barry, 160
scissors, paper, and rock analogy.
See also paper companies; rock

companies; scissors companies

competition cycle and, 115118

public relations, 24

overview, 154155

Purple Cow (Godin), 162

usefulness of, 123

pushing/pulling products, 20

scissors companies

protecting brand portfolios,

108113, 143

competition cycle and, 116118

defined, 154

radical differentiation, 26

disruptive innovation and, 120, 122

Ralph Lauren Polo, 73

Raynor, Michael, 41, 120, 167

121, 154

Reality in Advertising (Reeves), 20

Sears, 132133

transitioning to rock companies,

recommended reading, 159167

self-organization theory, 116

Reeves, Rosser, 20

Selling the Invisible (Beckwith), 165

renewing your zag, 115157

Senge, Peter, 54, 167

checkpoints for, 138143

17-step process, the, 138143

competition cycle, 115118

short-term focus, 130, 157

differentiation and, 130131

Shugart, Al, 134

dying markets and need for,

Simon, Herbert, 47

132133, 157

Simonson, Alex, 164

generative learning, 126, 129

keeping up with market change,

134135

leveraging change, 127, 156

overview, 154157

176

simple learning, 126, 128

Six Thinking Hats (de Bono), 162
size of business, 155
Smile in the Mind, A (McAlhone and
Stuart), 165

index

Smuckers, 85

Southwest Airlines, 40, 88

Virgin, 104

Spataro, Sandra, 167

vision of your business, 5458, 138, 148

speedup in business, 15

Volkswagen, 57

stable states, 116

Starbucks, 44, 77, 78, 85

stickiness, 109, 111

Wall Street Journal, The, 26

stock prices, 130131

Wannamaker, John, 6

Stone Yamashita Partners, 55

Warhol, Andy, 134

stretchiness, 109

Warhols Law, 134, 157

Stuart, David, 165

Welch, Jack, 62

success order, 61

Wheat Montana Farms, 67

Surowiecki, James, 161

Wheeler, Alina, 163

sustaining innovation, 120

white space, 40

Swiffer, 44

White Stripes, 67
Whitman, Meg, 120

Whole Foods, 44

telemarketing, 24

wine bar. See also Bibli

Ten Faces of Innovation,

The (Kelley), 165

alignment of, 75

brand leadership for, 63

Toffler, Alvin, 23

branding differentiation for, 66, 68

Toms Natural, 109

customer experience and brand

Tout Beau, 44

customer loyalty and, 78, 102103

Toyota Prius, 35

defining brand for, 5051

Trader Joes, 44

names for, 8587

travel, 5

spreading word for, 92

trends, 5859

trends favoring, 57

as element in checkpoint, 48

vision for, 55, 148

designing zag to ride, 5659, 139

Wisdom of Crowds, The (Surowiecki), 161

finding product, 44

World is Flat, The (Friedman), 159

TomTom, 85

building, 9699

powered by focus and

differentiation, 149
tribal identity, 20, 146, 148

Y
Yamashita, Keith, 167

Trout, Jack, 61, 160, 161

truelines and taglines, 8891, 141, 151

two-stage rocket, 132133

zag. See also designing your zag;

Unique Buying Tribes (UBT), 20, 146, 148

differentiation and, 33, 45, 6471

Unique Selling Proposition (USP), 20

marketing innovation and, 2627

unstable states, 117, 155, 156

onliness as test of, 6569, 140, 149150

Unstuck (Yamashita and Spataro), 167

standing out from clutter, 92

renewing your zag

abandoning best practices, 95, 152

uncertainty in innovation, 3439

index

177

aBOut tHe autHOr

178

Marty neumeier is president of neutron llc,

a san franciscobased firm specializing in brand
collaborationthe glue that holds integrated
marketing teams together.
neumeier began his career as a graphic
designer and copywriter in southern california
in the early 1970s, then moved to northern
california in the early 1980s to focus on brand
design for technology clients. By the middle
1990s, his firm had developed hundreds of
brand icons, retail packages, and other communications for companies such as apple computer,
adobe systems, netscape communications,
eastman kodak, and Hewlett-Packard. During
his first 25 years as a design practitioner,
neumeier won hundreds of awards for design
excellence, and his writing appeared regularly
in trade journals and design publications.
in 1996 he launched CRITIQUE, the magazine
of graphic design thinking, which quickly became
the leading forum for improving design effectiveness. in editing CRITIQUE , neumeier joined the
conversation about how to bridge the gap
between strategy and design, which led directly
to the formation of neutron and the ideas in
tHe BraND GaP.
today neumeier lives with his wife in Palo alto,
california. He has tried to develop a hobby or
sports addictionif only to seem more interesting
but so far has found nothing to equal the thrill
of simply working with imaginative people every
day. Both inside and outside neutron, neumeier
is a frequent speaker on design, brand, and
creative collaboration. you can reach him
at [email protected].

aBoUt tHe aUtHoR