6

WHICH SHIFT TO MAKE? IT DEPENDS ON WHAT’S AHEAD

Dustin Hoffman spent a good part of the movie The Graduate driving a fantastic-looking Alfa Romeo Spider, all the while doing what he could to win the affections of a fantastic-looking Katharine Ross. The Alfa Romeo Spider was Allen’s first car. More important, it’s a stick-shift. For those who have never driven a car with a stick-shift or manual transmission, it is as if you’re sailing down a three-lane highway at sixty-five miles per hour, the traffic moving nicely; there’s really not that much difference in how it feels compared to driving a car with automatic transmission. The engine is in fifth gear, not working all that hard, just humming along. There’s no real need for “active” driving.

However, the experience of driving a car with a manual versus automatic transmission becomes appreciably different when the road changes or when the conditions change. Maybe the highway narrows down from three lanes to two, or it becomes very hilly, or you must start maneuvering around a series of curves. Or maybe there’s an armada of trucks in front of you that requires a strategic passing exercise. It could be that the highway stops being a highway altogether and becomes a local road with traffic lights and lots of oncoming traffic. You could encounter a construction zone, making it necessary to stop and start, slow down and speed up. In these and any number of other situations the experience of driving a car with a manual transmission differs from driving a car with automatic transmission. In situations such as these, you need to be fully attuned to the road and to the car.

If there are hills or curves, you listen to the engine and determine if you need more power to take them on, which would necessitate an active downshifting to another gear, say, second or third. You shift gears if there is construction or weather to contend with. You need to look at the competition on the road, the trucks in front of you as obstacles that you’ll need to pass. You’ll need to downshift to get the full throttle and energy required to accelerate and pass. In a car with manual transmission you must actively drive. You must be aware of your environment; you must be in touch with the road, and in touch with the nuances of the engine to align your car’s power with the terrain and the situation.

The difference between driving a manual transmission versus an automatic is a good analog for what happens in many businesses. To stay successful, to stay relevantly differentiated, a good organization stays attuned to the external conditions—all the things going on in the marketplace and the world that pose potential challenges and a potential need to shift. If you’re successful traveling along at sixty-five miles per hour, steady as you go, maybe you make a few minor adjustments to tweak performance or make things more comfortable. Maybe you update the product, redesign a logo to appeal to a younger audience, or speed up production to get out ahead of the competition. In general, the organization’s purpose and promise to its customers remain intact and what it stands for in the minds of consumers more or less remains the same. You’re on cruise control.

Think Verizon going from landlines to wireless. Think Apple going from computers to tablets and watches. These companies continue to deliver against the same customer promise. In fact, they actually strengthen the promise. They’re playing in the same lane, so to speak, and they have the organizational know-how to know how to do the same thing, only better, more robustly.

But what if simply changing gears to deliver on the same promise, perhaps in an enhanced way, is no longer the answer? What if it’s not a matter of expediting a marketing campaign in light of current events, or changing up your inventory, or tweaking the latest model of whatever it is you manufacture? What if the road you’re on is simply the wrong road altogether? It might be that your promise is just totally off-kilter in the new world order and you have to rethink your value proposition. It might be that you have to rethink your employee population—great people, but with skillsets that won’t take you where you need to go. Maybe it’s that you realize you need to formulate an entirely new customer promise to be relevant. What if you’ve come to the end of the road with your offering and it’s not a matter of shifting gears but shifting direction? There are situations when shifting gears is definitely not enough to give your organization the advantage it needs to stay ahead. We have seen situations (covered throughout the book) where this has been the case: Kodak, IBM, Forbes, Xerox.

This chapter provides a continuum of shift examples from “close-in” gear shifts to more substantial shifts in direction. Using multiple examples, we offer insight from people who have led organizations through a shift in gears, a shift in direction, and those who have changed both gears and direction. In all cases, the stories underscore the importance of understanding organizational DNA, company culture, and effective execution in being able to successfully shift.

The acronym DNA has gained widespread use in the business lexicon. In the biological sciences, DNA is sometimes referred to as the building block of life. It determines who we are and what we can do. If our DNA doesn’t dictate large-scale athletic ability, we will not be able to participate in the Olympics no matter how hard we try. Carrying the metaphor over to the business domain, an organization’s DNA represents its building blocks of success: the skills, assets, culture, history, and knowledge that guide its ability to succeed—or to have succeeded to this point. The ability to honestly assess inherent organizational strengths and weaknesses impacts the odds of achieving a positive outcome.

For example, take Barnes & Noble, the world’s largest brick-and-mortar bookstore chain.

BARNES & NOBLE:
Understand Your DNA

Barnes & Noble is dominated by Amazon, at one end, with its low prices and vast selection, and at the other end by locally owned, carefully curated independent bookstores. Barnes & Noble has been stuck in the middle for almost twenty years, trying a series of gear and directional shifts to find its way. For personal input on this story, we spoke to John Rindlaub, currently vice president of marketing at Health Net, who had previously been vice president of marketing at Barnes & Noble.

“A lot of what happened was due to cultural behavior, norms, DNA, and values,” Rindlaub told us. “Everyone in the organization grew up in retail. Leonard Riggio, the former CEO, has been associated with the company for forty-five years. When Amazon launched in 1994, Barnes & Noble didn’t see it as a fundamental threat. They didn’t even think about launching a website until 1997. When I got there in 1998, the website wasn’t what it needed to be because the company basically tried to put the brick-and-mortar process online, without a basic understanding of e-marketing. By that time, Amazon had so much momentum it was impossible to catch up. Amazon had everything on its side. [It was] a founder-led organization; it was a purpose-based e-commerce company. Barnes & Noble looked at online as a hobby. Number-one lesson when trying to make a shift into a new arena? Never underestimate the competition, and never underestimate the effort. You’ve got to be all in,” Rindlaub said, adding, “I’ll never forget what Riggio said to me the first year I was there. ‘In 1995, why didn’t we see this juggernaut coming? Why didn’t we set up a website called Book Predator and have rock-bottom prices and just snuff Amazon out? Why didn’t we drop our prices and do predatory pricing for six months and have Amazon go out of business?’ We all know hindsight is twenty-twenty. But they couldn’t get out of their own way and their old way of thinking.”

The other thing that was happening during the period Amazon took the book world by storm was that Barnes & Noble was being equally distracted by another challenge. They were being maligned for snuffing out hundreds of little, neighborhood bookstores. (Watch You’ve Got Mail, with Tom Hanks and Meg Ryan, if you want to see the Hollywood version of the story. Spoiler alert. Happy ending.) Because Barnes & Noble’s retail sales were still relatively strong at that point, they didn’t feel the immediate pain of Amazon’s growth. As Rindlaub put it, “Then, all of a sudden, boom, you’ve got the boiling frog, Clayton Christensen’s innovator’s dilemma. If you don’t feel the pain, you won’t change. Dial up the water temperature slowly, and the frog doesn’t feel it. If Barnes & Noble had felt the pain, they might have been able to act sooner. But they had a retail mindset. They didn’t understand speed to market, or speed once you’re in market.”

Barnes & Noble also underestimated the power of Amazon’s Kindle and later the Apple iPad. This was another instance of a shift attempt without having enough of the “right” DNA, being able to execute quickly enough or brilliantly enough to overcome the competition. The essential issue for Barnes & Noble has been its DNA. It is a brick-and-mortar book retailer. In its first attempt to shift gears, to respond to Amazon, it became apparent that the company simply didn’t have the people, the tools, or the capabilities to execute an online strategy in a serious way. Then, trying a directional shift—creating an e-reader to compete with Amazon and Apple—again, it was not in the Barnes & Noble genes, not closely enough related to what they were known for and what comes naturally to them to be effective.

As of this writing, Barnes & Noble is trying another shift, one that leverages the company’s culture, their “norms and values,” and takes the company back to its roots. Leonard Riggio began leading the effort to create smaller community bookstores, with more on-floor sales staff and greater autonomy for store buyers to stock the merchandise that is most relevant to the local customer base. Barnes & Noble has sold more than 3 billion books. That’s a hard number to simply dismiss. If Barnes & Noble makes this shift successfully—actually, shifting carefully into reverse—it will be a boon to those of us who want to support neighborhood retailers.

While shifting gears should, in theory, be a bit easier than wholesale shifts in direction, this is not always the case. Each shift has its own set of challenges, risks, and rewards, as the following stories—and lessons learned—will bear out.

KATZ’S DELICATESSEN:
Sometimes Staying in Park Is the Right Gear

Sometimes the best shifts are the ones you don’t make. If you ask the customers at Katz’s Delicatessen in New York City, they’ll tell you, “Please don’t change a thing.” Personally, as long-standing customers, we agree. Their pastrami, sliced by the cantankerous guys behind the counter, is about as perfect as it can be. That said, the iconic restaurant that’s been serving customers for more than a century is shifting gears, just ever so slightly, so as to expand its business without diluting its authentic flavor.

How, exactly, does a veritable New York dining institution expand without losing what makes it special? Very carefully and very conscientiously, explained the restaurant’s “Top Dog,” Jake Dell, a proud alumnus of the NYU Stern School of Business. After 128 years on Manhattan’s Lower East Side, the restaurant, which is known for its mile-high pastrami sandwiches as well as its cameo appearance in the movie When Harry Met Sally, is in the process of opening a second location for the first time ever. It is also in the midst of figuring out how best to leverage technology to better share this quintessential New York deli experience.

Before we share the details about its shifting, we want to savor a taste of its history. The restaurant opened in 1888 as a small delicatessen called “Iceland Brothers” at a time when Jewish establishments dotted the neighborhood. Its name changed to “Iceland and Katz,” and then to Katz’s Delicatessen, after the Katz family bought out the Iceland family. Katz’s would later move across the street to its present-day location that today seats 300 people. Opening up a second location is a big deal for a business that is known as the restaurant equivalent of a time capsule. Everything’s the same as it’s ever been. The counter behind which those cantankerous guys—”cutters,” as they’re called—yell at each other as they slice the delicious pastrami and corned beef, the aromas of pickles and salami, hot dogs and onions, the neon signs and the mysterious “ticket system,” the clamoring throngs of hungry people, New York sanitation workers and Wall Street types freely mingling with each other and with the guide-toting tourists from around the world. It’s visual chaos that hits your every sense at once—sight, smell, and hearing.

So, again, think carefully about whether to shift, and how much to shift, and if you can execute before you start down the road. “While we’ve had several opportunities to branch out over the years,” Dell told us, “the family held off until we could figure out how to do it the right way. The history and tradition of this place—it’s the classics, what people come here for—the same food every time you come here. All that needs to be the same and not changed. That’s what makes this place so special in my mind. When we talk about the core of who we are, it’s the food and tradition, the nostalgia, and the atmosphere. We’re lucky compared to other businesses [because] not changing is actually what makes us popular, especially in the restaurant industry in New York City. That is rare, but that’s who we are.”

Dell and his family are attempting to replicate the quality of Katz’s food elsewhere, although not at a sit-down restaurant but at a stand at the DeKalb Market Hall in City Point, Brooklyn. “It’s in the old Albie Square Mall, near Fulton and Flatbush,” Dell explained. “Yes, it’s only a small takeout place, but we felt being a part of a vibrant community that’s loud and bustling, which this area [the Lower East Side] is, would be true to who we are. It’s the kind of environment we love. The Fulton neighborhood is very similar to our Delancey Street area. We know we’re never going to re-create the original place, but we want to make it easier for our regulars, who are finding it harder to get to Manhattan, as well as to be able to cater to the millennials in Brooklyn, a group that is keen on authentic experiences. It’s a way to bring the tradition and food just a little closer to people who already know who we are.”

That millennials are an Instagram-crazy bunch is also not lost on Dell, and a reason for another of the restaurant’s minor shifts in gear. After decades without any public relations, Dell actively embraces this social media, audience-activation app as a boon to his business. “I push for Instagram because it reinforces the original aspects of who we are. Any changes we undertake are specifically to reinforce who we are. Social media is good for our business. Instagram really conveys our authenticity to people, especially the sensory part of experience,” he told us. “We’re the third most Instagrammed restaurant in the country. Our place, our food, our employees, our customers provide great photo opportunities. It’s an easy way to grow the business while staying true to who we are. We’re balancing change by appropriately leveraging social media and technology to get the experience out to more people.”

The shift in tactics to leverage technology is also making it possible to get more of the actual product out to homesick New Yorkers across the country. Without disturbing the “front of the house,” Dell’s back of the house operation is undertaking a strong push to ship nationally with packages delivered overnight directly to peoples’ doorsteps—some pastrami, a rye bread, some pickles, knishes, some mustard. While it can’t re-create the real restaurant experience at home, it’s still a delicious taste of home.

“The net takeaway for our success,” said Dell, “is that you need to stay true to who you are. I think a lot of businesses go under because they lose sight of that, and when they transfer from generation to generation, the next generation wants to change everything. For me, it’s a matter of respect the traditions—and respect the things that work. And, yes, you have to change, to adapt and grow, but if you do this while sticking to your core values and traditions, that’s what counts. If you’re going to make a change, do something different, you’d better be confident that it’s your best product and you’re putting your best foot forward.” Katz’s Delicatessen is a restaurant very much in touch with its DNA.

CHEERIOS:
“Small Shifts” to Meet Shifting Attitudes

It’s pretty easy to see how rapid and dramatic changes in technology and media necessitate a shift for companies in these categories. It is not quite as easy to see the portents of change that would necessitate a shift for companies in more homespun categories, like packaged goods. But those portents are indeed there. And, as a result of the seismic transformations in media and technology—read, social me-dia—they are not nearly as subtle as they once were. Even the most traditional of packaged goods companies have had to shift, at the very least, marketing gears to keep up with changes in consumer attitudes toward everything from what constitutes healthy eating to what constitutes a family unit. When an ultra-traditional megabrand like Cheerios, for example, addresses mixed marriages and makes the daughter of an interracial couple the star of one of its advertising campaigns, it’s an indication that no brand is immune from the need to shift to stay relevantly differentiated.

The shift for Cheerios was not in the makeup of its product, but in the makeup of its marketing. Let’s start with a bit of background. In 1941, General Mills was looking for a product that would compete with Wheaties and Corn Flakes in the growing ready-to-eat cereal category. Wheaties and Corn Flakes were both made from corn. To differentiate its product, General Mills decided to develop a cereal made from oats. Needing to further differentiate its offering from oatmeal, it perfected a machine that produced puffed oats in the shape of tiny inner tubes—a shape that was to take on iconic status through the years.

Cheerios remains a leading breakfast cereal with Americans who bought $994 million of the brand in 2014.¹ Cheerios was launched in 1941 with two purposes in mind. First, General Mills aimed to bring the health benefits of oats into the mainstream. Second, General Mills positioned the brand to bring families together at the breakfast table.² Over the last couple of decades, as concerns about cholesterol and heart disease have taken hold, Cheerios doubled down on the health benefits in its marketing by shifting its message to address the health issue. At the same time, Cheerios executed significant marketing shifts in recognition of how the composition of families has changed.

“Your job as a marketer is to explore an underlying truth,” said Mark Addicks, the former chief marketing officer at General Mills, during our conversation. “Consumer attitudes have shifted, and we’ve had to shift our messaging. A brand’s culture should expect to be continually changing, especially in this world we live in, which is very fast, very connected, very news-oriented, and in which consumers quickly learn new patterns. We absolutely need to make shifts in recognition of this. It used to be that you had an annual meeting and everyone would just keep following the same GPS. Now, you wake up and life has changed. The place to start shifting your focus for a brand is when the brand is in a healthy place.”

Among the societal breakthrough campaigns that General Mills produced in response was an ad titled “Adoption,” based on a true event, about a couple that adopts two children from Eastern Europe.³ The spot starts with a woman and man riding in a van on their way to the orphanage to pick up their children. The children are a little shy, but beyond the uncertainty, the scenes portray a great deal of hope for the new family. On the plane ride home, the woman gives Cheerios to the two children, making a little smiley face out of the Os. The boy and girl smile in response.

Another of the General Mills consumer stories brought to life was a series featuring a little girl named Gracie. In the first spot, “Just Checking,” Gracie asks her mother if it’s true that Cheerios are good for your heart. A beat later, her father wakes up from a nap in the other room with Cheerios all over his chest. In another spot in the series, during which the family is sharing breakfast together, Gracie’s parents share the news that she will soon have a new baby brother; her response is a request for a new puppy. That the mother is white and the father is black won General Mills kudos for showing what real families look like. According to the Wall Street Journal, Cheerios has generated 80 percent of all digital engagement in the cereal category.⁴ While there was some derogatory feedback, most of the online conversation has been very positive. As for the most recent health-related messaging, General Mills produced a YouTube video starring Manitoba farmer Edgar Scheurer, who supplies oats for Cheerios. From the farm to the table, the company wanted to reinforce that oat seeds, from which Cheerios are produced, are transformed into a healthy breakfast—so it is going back to the, well, roots of its product.

“You need to be culturally in tune with what’s important to your customers and potential customers,” said Addicks. “We’re not looking to make massive shifts. We just need to be constantly ready to make the little shifts—changes that address the conversations people are having—to keep our relevance high. It’s a huge challenge to identify and seize an opportunity before performance metrics kick in. But whether it’s pure food, or being able to pronounce the ingredients, or family dynamics, the objective is to lock onto a key insight and build on it.”

HASBRO:
Game on . . . Shifting by “Zooming Out”

Hasbro’s stock is up, literally and figuratively. Over the past few years, the maker of Transformers and My Little Pony, Play-Doh and Nerf, has had a series of outstanding quarters, more than fulfilling the expectations of its shareholders. Its stock is up, too, with kids and parents (and grandparents), whose expectations for entertaining experiences are also being pleasantly fulfilled. We say “entertaining experiences” rather than toys or games because that was the focus of the shift—and the brand blueprint—that emerged after Brian Goldner and his team took to their realignment measures.

But before we get to the here and now and our discussion with Goldner, we quickly serve up the backstory. It was in 1923 that the three Hassenfeld brothers (hence, Hasbro) founded a textile company, selling textile remnants in Providence, Rhode Island.⁵ Over the next two decades they expanded to produce, first, pencil boxes and school supplies and later toys and modeling clay. Its first hit toy was Mr. Potato Head, which the company purchased from toy inventor George Learner in 1952.⁶ The toy was an incredible success and, in 1954, the company became a Disney major licensee.⁷ Another incredible success came with the introduction of the G.I. Joe “action figure,” so-labeled to avoid the word “doll” and appeal to boys. In 1964 and 1965, G.I. Joe accounted for two-thirds of the Hassenfeld brothers’ sales.⁸ (The Vietnam War and, later, the price of plastic and the cost of production, contributed to its decline in sales.⁹)

In 1968, the company shortened its name to Hasbro Industries and began a decades-long period of expansion, starting with the purchase of Burt Claster Enterprises, which produced “Romper Room” and an affiliated line of toys, followed in the 1980s and into the 1990s¹⁰ with the acquisition of Playskool, Kenner, Coleco Industries (the maker of Cabbage Patch Kids), as well as the Tonka Corporation and its Parker Brothers unit, creator of Monopoly. Hasbro also purchased Wizards of the Coast and Dungeons and Dragons.

Hasbro’s growth activity during these years includes a much longer list of licensing deals with major entertainment franchises and channels, CDs, television and movies, interactive games, and even a venture into virtual reality. It was also over this period of time that the company became a global entity, working with manufacturers and distributors from Mexico to Europe to Asia. Its management, too, went through multiple changes during this period, transferring from fathers to sons and then to a grandson before moving on to leaders from outside the family. The bottom-line results from one year to the next were at times good and at times not so good; the not so good due, in part, to too many efforts and not enough vetting of the individual efforts and their implications.

Things were in the not so good category when Brian Goldner took the helm and became president and CEO in 2008. The company had not only lost billions of dollars, they were, as Goldner told us, “in need of serious alignment.”

“We owned 1,500 brands, had zero economy of scale, zero salience or relevance. It was the world’s most complex plate-spinning competition,” he said. “We’re spinning all these plates to try to eke out sales from lots of things. Letting go of any one of these plates would mean a reduction in revenue and not a lot of ways to replace it.”

What they recognized they needed to do, Goldner explained, was to start reinvesting in consumer insights as a way to determine which few brands had the potential to be big again. What the company wanted to do was go back to a winning strategy that had catapulted the brands at a specific time in its history: connect the brands to consumers through storytelling.

“In the 1980s,” Goldner began our conversation, “Hasbro was one of the fastest-growing companies on Wall Street. Our revenues went from $100 million to $1 billion. It did this through a variety of very contemporary means for the time. In fact, in the mid-1980s, the company used kids’ syndicated television as a new branding tool to launch brands that are perennials in the toy and the entertainment business, specifically My Little Pony and Transformers. Hasbro was able to unlock the potential of media as a storytelling device before any other toy company did,” Goldner said. “They created more relevance and salience around these brands for an audience that was being introduced to a host of storytelling sources. Stephen Hassenfeld, a son of one of the founders, was the visionary leader who took on visionary methodologies to invent and reinvent brands using the storytelling power inherent in media.”

Goldner took this strategic cue as he and his team began the process of building a core group of seven brands that they believed could grow to their historical heights, billions of dollars in revenue, by surrounding them with stories. “We used very simple terminology. We said ‘we need to build a seven-layer cake.’ If we could get these seven layers going, take on the challenge, and succeed in bite-size pieces, it will become a lightning rod for our shareholders, both internally and externally. The seven brands we identified that we were going to focus on represented 17 percent of $2.7 billion. Today those brands represent 50 percent of $4.5 billion. And we still have forty to fifty other brands with the same potential.”

Referring to the 2008 time frame, Goldner explained that Hasbro “had to become more ‘choiceful.’ We had to make the hard decision to let certain brands fall away and go fallow in order to focus the appropriate resources, personnel and otherwise, on the company’s rebuilding efforts. We had to have the moral fortitude to say we understand what is happening and we need to communicate it to Wall Street, and to our organization. You have to be able to say ‘no.’”

As an example of “saying no,” Goldner cited Tonka, producers of iconic toy trucks and a brand that Hasbro had focused on for years. Although Tonka produced quality products, Hasbro assessed the potential growth of the brand and ultimately agreed the brand would never achieve the enterprise value they were looking for. As a result, Hasbro licensed it out to another party.¹¹ Being selective in the short term meant giving up immediate revenues for the sake of the longer-term picture.

But, let’s get back to the focus of Hasbro’s shift, the difficult decisions to be made, and the brand blueprints—the real game changers in enabling Goldner and his team to make the significant gains they have. These blueprints are “ever-evolving documents,” as Goldner told us, which put individual brands at the center of everything related to its brand experience, brought to life in a variety of forms and formats, from toys and board games, to video games and movies, to television programming and online entertainment.

“Understanding your audience better than anybody else, investing considerably in the time and effort to get under the skin of that consumer, not only in their behavior today, but in the trends from which we then extrapolate, enables us to be ready for where the consumer will be in five or ten years relative to media behavior, family dynamic, and play behavior. We surround our brands with not only proprietary, quantitative consumer insights, but with compelling storytelling. It’s our strong suit from a historical perspective,” Goldner told us. “The company’s successes have drawn largely from its transformational focus on content and storytelling, everything from episodic programming to social media to user-generated content, every screen and every touchpoint that is relevant to our audiences. Our strategy is to build on what we already do well, reinvention and reimagining. Provide children and their families with immersive experiences so they can enjoy Hasbro brands anytime, anywhere. Surrounding our audiences with stories and characters around our brands has always allowed us to engage with consumers in relevant ways.”

As he predicted, Hasbro’s top-line results following its “seven-layer cake” decision, together with its blueprint strategy to create immersive brand experiences, while choppy at first, would eventually become significantly positive, to which the wizards of Wall Street can happily attest.

Goldner’s comments, on both Hasbro’s challenges and its ensuing strategy, were reinforced by Kevin Lane Keller, the E.B. Osborn Professor of Marketing at the Tuck School of Business at Dartmouth College and the author of bestselling textbooks on brands and marketing management. “Hasbro had a double challenge,” he told us in our conversation. “One was they had too many brands, so they had to really focus on their power brands. But the real shift for them was prompted by the realization that kids’ definition of entertainment was changing. Kids were just getting more sophisticated. Hasbro fully understood that entertainment and technology were going to be driving the toy business,” Keller said. “The challenge was how to align your forces to make sure you can execute well in these new arenas. How do you get into the digital game in a meaningful way, and how do you integrate well with entertainment?”

As Keller explained, the real “eureka” moment for Hasbro and Goldner came about when they expanded their view of who they really were, what business they were in, not falling prey to marketing myopia: “We’re not in the toy business. We’re in the entertainment business.” That the toy business was an integral part of this was not disputed, but the larger picture was how to employ and optimize movies and music, digital apps and games to expand the entertainment experience. It was because they were in the toy business, the business of entertaining kids, that consumers gave them permission to make this shift.

“I always talk about positioning and its three components: desirable, deliverable, differentiate,” said Keller. “To succeed, you’re always trying to find the new desirable spot from the consumer’s standpoint. Something that you can truly deliver on and that consumers will accept. Hasbro came to the realization that the company was in the entertainment space, yes, but also that they had the authority to go there. They had been integrating toys and entertainment for years. They had the history and the credibility.” They just needed to shift into a higher gear.

In our discussion, we also talked about the courage factor. In Hasbro’s case it took courage first to reduce the product lines, some of which had been very popular, and then to shift more fully into the entertainment space. Both were pretty big bets. We agreed as well that you have to not only have the conviction to make these bets, you have to have the DNA that will support your efforts. The Hasbro DNA was—and is—based on the spirit of innovation and reimagination. It is a culture based on fun—in fact, there is a “fun lab” at corporate headquarters. To show commitment to those founding principles, its DNA, Hasbro not only tripled the investment in the fun lab under Goldner’s leadership, but it has built fun labs in several countries around the world. “You don’t buy research,” Goldner said about this investment. “You do it yourself. You put it right under your nose and you lean into it. We took cost out of other areas to focus on things that matter to our customers. There is a mantra in our organization. ‘Through curiosity you remain passionate and through passion you remain driven.’ This is our culture.”

CNN:
An Important Message for Media Companies

That the technology and media industries are intrinsically bound is without question. That when one shifts the other feels an immediate impact has been demonstrated for eons, not just in this era of Facebook, Instagram, and Snapchat. From the printing press to the transistor to the cloud, technology and media have worked together to give people their news and entertainment. That this dynamic has gone into overdrive over the last half century is the point of this story about CNN and the fact that to keep its edge as a premier media company, it can never stop shifting gears.

First, as context, whether or not you were alive at the time, you know of that tragic day in November 1963 when President John F. Kennedy was assassinated. Those of us old enough to remember can tell you that we all stopped what we were doing to find a television to watch. The same thing happened just six years later, in happier circumstances, when men first walked on the moon. That’s the way things operated for many years. If you wanted to find out the details of the latest breaking news event, you turned on a television. Seeing an untapped opportunity for people to watch the latest news in real time, Ted Turner launched CNN (Cable Network News), the world’s first twenty-four-hour news network on June 1, 1980.¹² CNN went on to change the notion that news could only be reported either at fixed times during the day or as a breaking news flash.

At the time of CNN’s debut, television news was dominated by three major networks, ABC, CBS, and NBC, and their thirty-minute nightly broadcasts. Like many new ventures, CNN lost money in its first years of operation. However, Turner continued to invest in building up the network’s news bureaus around the world and, in 1983, bought Satellite News Channel.¹³ CNN eventually became known for covering live events around the world as they happened, often beating the major networks to the story. The network gained significant traction with its live coverage of the Persian Gulf War in 1991,¹⁴ and continued to grow in popularity along with all of cable television during the 1990s. People were literally and figuratively hardwired to get their news on television—and predominantly on CNN.

Turner had not simply built an innovative distribution channel, but a novel business model with his all-news-all-the-time idea. It was a model built on two revenue streams: one the money the network made from advertisers, and the second from the fees paid by cable operators who were locked into contracts. This double source of revenue gave CNN a huge advantage over broadcast television.¹⁵ And the model worked pretty well, even up until the tragic news event on September 11, 2001, when many people still turned to television in the days and weeks that followed to stay current with the details of this horrifying moment in history.

It was at about this time that the terrain in the media industry, and specifically the screen-related side of the industry, began to change. CNN had to shift and maneuver through this terrain if it wanted to maintain its leadership as the go-to twenty-four news source. First, there were the bumps in the road created by competition within television cable news, from MSNBC to Fox News. There was an even more fundamental transformation: Which screens were people watching when they said they were watching television programming? While baby boomers are beginning to turn to their iPads or iPhones for news and views updates, younger viewers never got into the habit of sitting down on a couch to watch the news. How many even get their news from a news channel versus a Twitter feed or Facebook page? For that matter, how many teens or millennials curl on the couch to binge-watch their favorite series when viewing these screens? It’s no longer a matter of all-news-all-the-time on the family television, but all-news-entertainment-gaming-all-the-time on the screen you carry in your pocket or backpack.

CNN continues to be faced with a challenge of the performance versus opportunity variety. First is the gravitational pull toward the performance of its existing television business on which it built its iconic brand name. For any company, it’s simply very hard to move resources and attention toward a new opportunity, which in CNN’s case is digital platforms and programming. The balance for CNN is to continue to stay on top of its existing game, not treating it like a second-class citizen, while paying heed to the newest generation of news seekers and their information-gathering platforms of choice. This is not just true of television, but of print media such as the Wall Street Journal.

Part of the challenge is, indeed, a generational behavior issue. Another part, and a big part specific to cable news networks, is related to those two streams of revenue generation. First, there is convincing advertisers to deliver platform-specific content for online media instead of reusing television spots online, and then getting customers online—and in a television-on-demand mindset—to watch ads instead of installing ad blockers. Equally important, getting people to pay for content that they can find for free is a major challenge. While 85 percent of millennials say that keeping up with the news is important to them, only 40 percent say they will pay for a news service, app, or digital subscription.¹⁶

We had the opportunity to speak with Jeffrey Zucker, a long-standing player in the media business and currently the president of CNN Worldwide, about this scenario. He summed it up this way. “I think the mistake people used to make was that that digital was a complement to linear. It’s not a complement. It’s its own unique product. We expect CNN to be everywhere. We’ve invested in keeping our linear television channels strong, keeping our core strong. But we’ve also had to invest in the future, into digital. Shifting resources from linear to digital, we’ve had to make sure that linear doesn’t suffer. That’s the challenge. We are hyper-focused on protecting the core,” said Zucker. “Instead of treating digital as a second tier or second priority, we’ve looked at each vehicle equally, balancing the existing performance metrics against the future opportunities.”

With the digital and analog worlds colliding, and the fierce buffeting of revenue sources—advertising and cable operating fees—it’s a very difficult balancing act. That CNN maintains focus on what it stands for in the market, the original purpose and values that give it credibility and authority in the category, is critical to its future success. Scot Safon, the former chief marketing officer at CNN Worldwide, gave us his perspective on the shifts in gear that CNN has had to make over the last few years in this environment.

“The underlying business model meant CNN had to make some shifts,” he said. “There’s no way the business could stay the same way for even five years from now. CNN successfully saw digital coming and, while it shifted to offer a digital platform, it stayed pretty true to its original focus—gathering real-time video content when it happened and maintaining the gravitas of its journalistic credentials. Reporters not just pointing a camera, but who had expertise in the field, an expert’s perspective.”

Even though the digital platform wasn’t perfect, Safon said, CNN got into it early enough to stem the flow of viewers going to other sources. Eventually, CNN knew that video was going to dominate online, as more people had broadband connections and video expectations. How did CNN plan for evolving digital demand?

“We knew where the tipping point was. We could see it coming,” Safon said. “We have excellent consumer insight simply by being in the space we’re in . . . just by watching everyone’s behavior on the site and on the network. We could watch them watching us in real time. And CNN lives in the world of watching what was happening . . . and projecting what was going to happen next—the organization is deeply tied to this kind of stuff.”

Traditional consumer research was thus less insightful than benchmarking actual consumer behaviors. “If you ask consumers how much television they watch, or where they get their news, they don’t even know. They constantly under- or over-estimate how much time they watch television. So, the first priority was making sure that we had the free digital Internet component, because that’s where customers were going—especially when they were at work. Then, to remain true to the brand, we had to stay on top of technology that would let us both report from—and be watched in—remote places. And we were going to have to be as strong in digital as we were in television,” Safon said. “But those decisions had to be made before we were sure exactly how it was going to be monetized. Nobody was really sure what the business model was going to be in those early days . . . I think people just assumed you had to have strong digital to drive people back to the core business, which would be TV.”

This is a shift still in progress for CNN. Its goal over the next year or two is to figure out how to make digital content so irresistible that it will be seen as a must-have service. This is a significant shift in its content model: to find a way to create relevant news stories for a generation that has different expectations from content.

“Facebook gives you a newsfeed. Twitter gives you a newsfeed. They’re not reporting, but—like it or not—they’re giving you news. CNN and its competitors are all figuring out how to participate in this [environment],” Safon told us. “Suddenly they’re competing on a playing field that has a lot of content that looks like news . . . but it’s from non-journalists. But CNN is built to pivot quickly and easily into new platforms because it is used to turning around storytelling instantly—high-end productions as well as raw footage and live coverage. Throughout the development of digital content—from desktop websites to mobile apps to social media platforms—CNN shifts quickly to adapt. When we launched iReport, our consumer journalism platform, we essentially deputized our consumers as stringers. But the differentiator will always be the investigative and enterprise reporting—the stuff with context. CNN continues to double-down on this. The focus they’ve never lost sight of is journalists bringing you the inside story.”

CNN is a very robust brand whose view of the business remains the same: “It’s what Ted Turner set out to establish. It’s a 24/7 global news source.” The current challenge for both its cable and digital platforms is how to pay to send a reporter into the line of fire to get the news, to look at news with an insightful perspective in a way that will be appreciated by the next generation. With an endless stream of news events breaking live on an endless stream of social media sites, CNN certainly has the capability to capture everything in dramatic fashion, from natural hurricanes to political hurricanes. That it must not lose control of the steering wheel as the world turns dramatically faster is the most critical challenge for CNN and every other player in the media category.

CONSERVATION INTERNATIONAL:
A Shift to Link Environmental Conservation to Economic Growth

When one thinks of organizations that have undertaken significant shifts, it’s not likely that a nonprofit would be among the first on your list; it may not even be on your list at all. That’s what makes Conservation International’s story so extraordinary. Most nonprofits select a cause or a mission and build their organization to deliver on that cause or mission. They spend most, if not all, of their time and their money and their passion—their existence—traveling down that road to execute the initial vision.

That was the case for the first twenty years of success for Conservation International, a not-for-profit environmental organization, and its founders, Peter Seligmann and Spencer Beebe. After two decades of concentrating on the preservation of “hot spots,” or areas with a high level of biodiversity that were being threatened with development, Seligmann and his group redirected their efforts to link environmental conservation to the economic self-interest of surrounding communities. That it has cost the organization both employees and members en route to its current successful position in the category is something Seligmann acknowledged during our conversation, recalling the day he told his staff of the plan. “I said to my team, ‘This can’t be one more thing we’re doing. This has got to be the driving, aligning characteristic of our institution. And we have to redesign the organization. All of our efforts to save the planet will be nothing if we don’t make big changes—and fast.’”

To appreciate what prompted Seligmann to make this dramatic shift in direction, it’s necessary to look at the organization’s initial mission, and its work, to comprehend what it was he saw in the terrain ahead. Founded in 1987, Conservation International focused on identifying the most threatened natural areas in the world, trying to prevent industries from doing further damage in these areas, and establishing policies that would preserve the flora and fauna for the future. For instance, in 1987, they brokered the first-ever debt-for-nature swap with the Bolivian government, purchasing a portion of the nation’s debt in exchange for preserving 3.7 million acres of the Beni Biosphere. In the 1990s, Conservation International narrowed its mission to prioritize biodiversity hot spots and establish corporate partnerships with large companies such as McDonald’s, Exxon Mobil, and Starbucks to create more sustainable business practices, as well as to get them to support indigenous businesses, in the hopes of making conservation efforts self-sustaining in the future.

“My thought,” Seligmann said, “was if we could actually use conservation of these hot spots as a way to generate economic benefits for these communities, they would embrace the conversation. So, that was the approach in the very beginning. This was different from what traditional conservation efforts were doing, and we found great receptivity. We were focusing on how to protect biodiversity hot spots and how to improve the quality of the lives of the people who lived there. Our drive,” he said, “was to see if we could have a scale of success that was truly transformative. For example, we told Starbucks, ‘You don’t have to cut down a forest to grow coffee. In fact, when you cut down the forest, you destroy the biological diversity. Your customers would love it if you actually worked to protect these forests and grow coffee.’ [In 2015] Starbucks announced that 99 percent of all the coffee it grew and sold was achieved by a standard we created called CAFÉ, which stands for Conservation and Farmer Equity.”

Seligmann explained that while the organization was pleased with its initial results, it became clear that the impact was marginal relative to what it could and, importantly, should be doing. His conclusion after looking at several data points was that it was setting up “islands of conservation within a sea of development. The most powerful force on earth was development because that was the way nations measured progress. And it was completely disconnected from the conservational interest. For me, that was a very important recognition. What is threatened is not biodiversity, but the stability of nations, the well-being of communities, and the health of families.”

This realization brought Conservation International to the proverbial “fork in the road,” and it was the genesis for the changing of its mission from protecting biodiversity to supporting human well-being by procuring the health of ecological systems, with biological diversity being the underpinning of all stable societies. Conservation International was no longer going to be focusing on how to protect a big place or a little place, but shifting attention to the fact that, in terms of business profit and success in the long term, nature needs to be helped. “How do we let people know that a coral reef is not just a beautiful place for fish diversity, but it’s a protein factory, the source of protein that all of these people depend upon? Our mission had to shift. If we did not focus on humanity, we were going to be marginalized. Development was going to wipe out ecosystems at the extraordinary pain and suffering of humanity.”

As one might expect, Seligmann got a mixed reaction from his staff. Almost all of those who signed up for the organization’s guiding mission did so because they so fervently believed in it. Changing course was a jolt. “There was enormous resistance within the organization,” said Seligmann. “We lost about 20 percent of the staff. Many people thought I had abandoned conservation and was just someone who was interested in development. I eventually succeeded in explaining that the protection of nature had to be understood as an essential part of the developmental progress activities of communities and organizations that were focused on well-being. I explained that we had been treating a symptom. You can’t solve poverty in sub-Saharan Africa by destroying ecological systems that are essential for the production of food.”

To overcome obstacles in the way of achieving future goals, Seligmann and his staff made a list of which organizations and companies were acting as positive “global agents of change,” as he called it, and they constructed a business model on best practices. More than this, they analyzed and assessed their institutional assets—what skills they had that they could leverage for optimal outcome, the core areas of expertise, and the relevant partnerships that would enable them to maintain credibility with staff and donor groups. These steps were critical to success when considering a shift in either gears or direction. “I felt that if we were going to be honestly successful, we had to redesign our institution. It was not a matter of adding something on to what we were already doing. I believe that to be transformative, you have to be crystal clear about what you are trying to achieve, and you have to put all of your resources into it,” Seligmann said. “Being really impactful, really successful requires intensity, excellence in execution, monitoring, and truthfulness. And that’s not something you do as a sidebar. For me, the most significant thing is to understand your brand, your purpose, your DNA, your mission, and to focus on them so they are truly aligned. Then you have to hire people who align with this mission and are ready to participate in this way.”

Seligmann’s understanding that it is essential to have a clear mission before you can execute on it brilliantly is certainly another of the reasons for this organization’s success post-directional change. This said, Seligmann agreed that it was relatively easy to communicate the nonprofit’s former mission, the conservation of ecosystems. An emotional, beautifully photographed scene of an endangered baby animal is a powerful and memorable branding signal. It has been much more complex to communicate the link between the conservation of nature and the economic well-being of those in the nearby environments. “If you look, for example, at the eastern coast of Brazil and the transformation of the tropical rain forest into a massive eucalyptus plantation, short term you can say it will increase jobs and productivity. What you can’t see is the destruction of the soil, long term, and the depletion of watersheds and sources of freshwater and edible fish. These are the types of things we have to communicate, and the measurements we have to prove. To achieve our objectives,” he said, “our efforts need to be able to demonstrate relatively complicated ideas in as simple a way as possible to have the required impact.”

In the shift that Seligmann and his team are following, there is no simple, telegraphic way to tap quite as evocatively into people’s emotions, but they have nonetheless found other, more profound ways to get their message across, and the results are incredibly rewarding. For instance, Conservation International launched a decades-long partnership with Walmart that includes efforts to bring more sustainable products to consumers and support supply chains that are more resilient to climate change and environmental impacts, such as reducing deforestation associated with the global palm oil footprint and implementing innovative sourcing strategies for jewelry and seafood. Rob Walton, son of the company’s founder, Sam Walton, serves on Conservation International’s executive committee. The Bill and Melinda Gates Foundation announced a $10 million grant to Conservation International to create a global monitoring network, called Vital Signs, focused on the direct connections between ecosystem health and agricultural productivity. To raise awareness of its new mission on the consumer front, Conservation International produced a series of short films titled “Nature Is Speaking,” launched in 2014 and narrated by major Hollywood celebrities including Julia Roberts, Penelope Cruz, Robert Redford, and Harrison Ford. “Through these efforts, and many others,” said Seligmann, “we are looking at how to accomplish sustainability. If we can identify what is the natural capital and where it is located, we can come up with a plan to protect it. Our goal is clear—to protect nature as a source of food, fresh water, livelihoods, and a stable climate.”

Today Conservation International is thriving and growing in scale. Seligmann made a significant strategic shift in direction in what is now a $250 million organization because he recognized that meeting the needs of people is crucial to meeting the needs of nature. By shifting direction and reframing the challenge—asking “What do ecosystems do for people, and what does biodiversity provide?”—Conservational International has made an investment in the planet and the long-term sus-tainability of its most fragile communities.

IBM:
A Legacy of Continued Shifting

Some organizations are built for rapid gear shifting from the get-go. Everything is set up to enable the company to shift gears quickly and fluidly, from organizational structure to the open-communications policy to the process for fast-tracking ideas. For example, Facebook is a technology company that was established to outpace the fast pace of change. IBM is different. Founded in 1911 as a maker of scales, cheese and meat slicers, coffee grinders, and the like, IBM eventually got into the business of making computers. Then it got out of the business of computers and into business enterprise solutions. IBM has been very adept at shifting direction.

Our conversation with IBM senior vice president of marketing and communications, Jon Iwata, suggests that they view it otherwise. IBM has never defined business as what it sells, but rather, what it believes in. At IBM’s core are a set of values that have remained constant over the years, even as what they’ve done to meet their customers’ needs has changed. It is because of this that IBM has been able to shift by degrees while keeping the positive equity in its brand. It may not shift gears as quickly and with the same agility as a Facebook, of course, because of its age (let’s call it advanced middle age) and because of its magnitude relative to other tech companies; nonetheless, IBM makes it happen with authority.

Before we get to Iwata’s more detailed insight, it is worthwhile to give a brief overview of two famous examples of IBM’s shifts. First, in 1993, the once-dominant computer company was on the verge of a breakup. The stock price had hit a twenty-year low. The company that had always maintained a lifetime employment policy let go more than 100,000 employees after posting an $8.1 billion loss. Worse, IBM’s way of computing and of working with customers was viewed as antiquated. The company struggled under the weight of a management structure that created independent business units with redundant processes and disconnected information systems. Because of years of operating with few competitors, it had become insular and slow to react to change.

Enter Lou Gerstner, former president of American Express and CEO of RJR Nabisco. While industry pundits assumed Gerstner was brought in to accelerate a breakup of the company into smaller units, Gerstner did just the opposite. He pushed it together, creating a much more streamlined and integrated company. He understood that IBM’s inherent strength was in its ability to solve complex (business) problems for its customers. To create value through total solutions, IBM had to become an adviser, not just a vendor. This initiative resulted in a campaign, and a way of doing business, called “Solutions for a Small Planet.” The word solutions critically expressed the core of IBM’s values and belief system.

From the outside, this shift—from manufacturing to advising—might have seemed incongruous with the company’s origins. The fact is, however, that IBM had always had a consulting component to its sales. The big mainframes you’d buy from IBM were not just plug and play. They had to be custom-built. There was a huge consulting dimension to the work the company did. Systems were tailored to a customer’s specifications.

The second major shift came in 2005 when IBM sold its vaunted ThinkPad PC business to the Chinese company Lenovo. And, yes, these were things you could buy off the shelf. But they did it with good reason, which many in the industry considered a win-win scenario. Lenovo had the desire to be in the hardware business, and the wherewithal to grow the business globally. In 2014, Lenovo further acquired IBM’s x86 server division, adding strength in this category. IBM, on the other hand, had the desire to shift even further into the enterprise “solutions” category, with a focus on analytics, mobile, security, and cloud, where it saw greater opportunity for future development and, importantly, could further support its customers’ needs. It knew it could not shift fast enough to keep up in the PC category.

And this is where Jon Iwata’s insight adds support. “Definition is critical,” he said. “Think about technology shifts, economic cycles, changing competition, shifting consumer tastes—with all that change, we can’t define ourselves by what we’ve been doing for x number of years. It’s important to define our business more broadly than ‘We make scales’ or ‘We make desktop computers.’ We define ourselves by our unique and distinctive character. How have we maintained a constant focus on our character over time? If you look at the entire history of IBM,” he told us, “you could say the company has transformed itself over and over again, but all in the name of helping solve meaningful business and societal challenges through the application of technology.”

Iwata went on to say that continuous focus on different ways to fulfill its purpose is what has enabled IBM to recalibrate how to best serve its customers. While this can be challenging in a company of IBM’s size, there are a number of ways it arrives at what Iwata called “pivot points,” especially in a marketplace that doesn’t change every ten years but every ten days. First is an annual process called the “global technology outlook,” a collaboration between IBM’s network of scientists, laboratories, and university researchers around the world who synthesize their findings into a point of view that drives the development of products and the merger and acquisition endeavors the company undertakes. As he explained, “It is a forecast, pointing out potential disruptions. The quasi-independence and objectivity of the research division lessens the chance that we’ll spend a whole year testing the functionality of a product only to step back and realize it wasn’t what the world wanted.”

Then, much as the research division takes a step-back global view of what’s coming down the turnpike, IBM regularly holds companywide “jam” sessions, engaging over 375,000 employees in more than 170 countries. “We think of it as our social network inside IBM,” Iwata said. “We use the input to gauge client experience metrics and measurements. We use it to gauge our employee engagement measurements, to hear people’s opinions on company culture and its values. It’s a form of crowdsourcing that helps us maintain the constant character of the business. The power of crowdsourcing also preserves authenticity. You get more buy-in on decisions when there’s transparency, when everyone can see the thousands and thousands of comments, the debates, the stories of what has worked and what hasn’t. We don’t constrain behavior, but learn from it. We actually have a term for it: ‘treasure wild ducks.’ It means we treasure interesting people, different across every dimension,” he said.

Iwata also explained that IBM’s philosophy relative to the “treasure of wild ducks” plays a significant role in how it recruits people. “We look for people who have a proven track record of reinvention. It’s made our gene pool stronger, our capacity for adapting to necessary changes more powerful and nimble. We look not only for people who have deep domain experience, but also people who are comfortable with moving fast, who can engage with colleagues and encourage them to do the same. We prize that at IBM—and I don’t think I could have said that about IBM thirty years ago. We put it at the top of our criteria today.”

That IBM hires people who have a capacity for reinvention and the ability to move faster is an indication of its awareness that it needs to get into even better shape, up its game in this brutal category if it doesn’t want to be eclipsed by younger, more inherently inventive companies. This is a notion that Thomas L. Friedman put forth as critical to succeeding in the hyper-connected world. That a company like IBM continues to define itself by its values, not its product set, also bodes well for its future. As Iwata said, “We say to our new recruits, yeah, you guys are so excited about Watson today, but ten years from now, twenty-five years from now, we will be in new spaces. We are not what we make. That is not how we define ourselves. Our culture is the best way to ensure the future of IBM for another 105 years.”

LINDBLAD:
Shifting to Deliver Deeper Expertise to a Core Focus

For those who think of cruising as sitting by a pool with a cocktail and getting off the ship occasionally to shop the jewelry kiosks, a Lindblad cruise is completely different. Regarded as the father of ecotourism, Lars-Eric Lindblad was the first travel company owner to take travelers where only scientists had gone—the first to have the insight that there are folks who want travel to be purposeful and genuinely transformative.

Lars-Eric Lindblad really wanted to be an explorer, and he channeled his passion into his travel business. A noted environmentalist, he was the first to bring those with an adventurous spirit to the most exotic places in the world, including Antarctica, Arctic Svalbard, Galapagos, Easter Island, the Amazon, Papua New Guinea, and Bhutan, all with the focus of creating experiences that fostered an understanding and appreciation for the planet.

In 1979, Lars-Eric’s son, Sven-Olof Lindblad, took over the company and expanded the vision by adding newer and more immersive ecotourism experiences. The fact was, however, that despite the incredible experiences, the brand was relatively unknown outside those intrepid types specifically interested in this type of niche travel. Looking for a way to elevate the brand’s awareness and adding differentiation to its experience without losing its core focus on authentic eco-experiences, in 2004 Lindblad Expeditions embarked on one of the travel industry’s most important strategic alliances when it joined forces with National Geographic to dramatically strengthen the experience they offered customers. By adding the deep expertise and gravitas of National Geographic’s scientists, explorers, naturalists, and photographers to their expedition cruises, Lindblad created a dramatically differentiated traveler experience. While other cruise lines could add a naturalist or a photographer, they could not match the depth of knowledge provided by National Geographic employees sharing their expertise with travelers. Today, Lindblad Expeditions-National Geographic operates its own fleet of ten ships, offering life-changing experiences on all seven continents.

Lindblad identified untapped audiences for the type of travel it offered. Its shift to partner with National Geographic was a matter of “playing golf,” keeping an eye on the consumers it wanted to attract. We spoke to Richard Fontaine, chief marketing officer of Lindblad Expeditions, about the genesis for this partnership and why it was a win-win.

“When Sven initiated the conversation with National Geographic thirteen years ago, he was looking for a way to elevate our awareness and simultaneously enhance the guest experience,” Fontaine said. “By aligning with National Geographic, it allowed us to bring the organization’s content, information, and educational programs—authentic real-life explorers and naturalists—into our guest experience. Among the most obvious examples is that on every one of our expeditions we have certified photo-instructors who have been trained by the photographers who are published in National Geographic magazine. They are at the top of their profession and you’re working side by side with them to improve your own photography skills. More than this,” said Fontaine, “the National Geographic alliance has allowed us to create a much more enhanced focus on environmental conservation and sustainability in the areas in which we travel. We are trying to leave the places we visit in better condition than when we started traveling, so future generations will have the same opportunity to see them. Obviously, there is no better partner for us than National Geographic. They have a field staff on the ground all the time, doing research to try to protect and preserve these places.” Connecting the two brands allowed Lindblad to add unique differentiation into its original explorer focus.

There is no better partner for Lindblad than National Geographic for another reason. While we analyzed the challenges of the National Geographic Society (NGS) with respect to its faltering magazine business (see Chapter 3), NGS is still perceived as a leading authority on issues of geographic knowledge and information. Its association with Lindblad has brought enormous benefit to both organizations. By shifting to connect with National Geographic, Lindblad adds to its gravitas as the groundbreaker in ecotourism, bringing the words and pictures within the National Geographic magazine’s iconic yellow border to life. Sven Lindblad knew what his brand stood for and shifted in a way that added more power and authenticity to the brand’s simple idea. Other cruise lines can hire photographers and naturalists; Lindblad lets you travel with authentic photographers and naturalists from National Geographic, experts in wildlife, the oceans, and the rain forests. It was a way for Lindblad to dramatically differentiate itself in the sea of cruise and travel companies.

COMCAST:
Two Shifts, Two Roads, One Purpose

You did not need to miss a thing at the 2016 Summer Olympics in Rio de Janeiro if you didn’t want to. NBC broadcast every event live, either on television or online—the equivalent of tuning in 24 hours a day for 250 days. We can safely say that it’s unlikely that anyone actually watched every minute of this event, but that was okay with Brian Roberts, the chief executive officer of Comcast Corporation, NBC’s corporate parent. His objective was to use the Olympic Games to harness the full power of a tool his company had been developing for cable customers, a tool that he hoped would become so essential to their content viewing habits that they’d never give up their Comcast subscriptions. During the Olympics, Comcast subscribers were able to search by event, athlete, or country, get alerts when an American was close to winning gold, and navigate through all these options by speaking into a remote device. The strategy behind this tool was to make it as easy as possible for Comcast customers to find what they wanted to watch on television or online, as the boundary between them continued to erode in the expanding universe of content.

The tool Roberts was betting on was its technology called X1, a black box with a voice-controlled remote developed to take on rival “digital assistants” from Apple or Amazon. Many liken the X1—and the software therein—to Comcast’s own version of Android or iOS, a technological platform upon which an empire of software, hardware, and collateral services can be built. It was initially designed for a specific TV-related purpose, the Olympics. However, it has much broader applicability. The incredible proliferation of cable channels, together with the exponential increase in the number of shows and movies available on demand from premium cable networks like HBO, Showtime, and Starz, was found to be overwhelming to many viewers. Instead of just throwing every channel into a linear grid accessed by clicking up and down with a remote, X1 aggregates programming from both television and online sources and arranges it by genre. The voice-activated remote responds to a user’s request by showing what’s available. The software lives in the cloud, which means Comcast can update it at any time without anyone having to come to your home.

That the X1 has been a game changer for Comcast is certain, as subscriber numbers and revenues from sales of X1 systems confirm. And it is just one of the tangible outcomes of the shifts in direction that Comcast has made over the last few years—shifts that took years to achieve. It’s one thing for a small, agile company to make a change in direction, culture, and employee skillset that’s cohesive and aligned with the mission. It’s another for a massive enterprise, like Comcast, whose infrastructure and culture and competencies are deeply rooted in yesterday’s technology. To set the backdrop for these shifts, let’s start with a very, very brief history.

In 1963, Comcast was formed after Ralph Roberts (father of Brian) purchased a 1,200- subscriber cable system in Tupelo, Mississippi. The name “Comcast” is a combination of the words communication and broadcast. Back then, cable television was in its nascent period, being slowly installed across the country to give areas with poor reception more channel options than the old rabbit-ear antennas could pick up. Due to federal regulations, cable companies could only serve markets under franchise agreements with local governments, which led to the creation of hundreds of individualized cable companies, each serving their own small markets. The industry began consolidating in the 1990s, specifically after the passage of the Telecommunications Act of 1996. Comcast, a major consolidator, had over one million subscribers by 1998. Acutely aware of what was in the road ahead with regard to technology and media and the concomitant consumer behaviors, Comcast continued its purchasing spree, acquiring not just cable operations but media and Internet companies along the way. In 2001, it announced it would acquire AT&T Broadband, and in 2013 Comcast finalized a deal to take over NBCUniversal, adding the iconic NBC peacock to its logo.

This brief historical overview is a textbook example of something “easier said than done.” The terrain and obstacles that had to be overcome for Comcast to attain its current position as a powerful “media” (not cable) company were significant. Along the way, Comcast struggled to stay ahead of the competition; the cable industry was becoming increasingly fragmented with rival companies providing customers with satellite and fiber optics, more reliable technologies than Comcast’s in-ground “pipe,” as it was called, that provided faster service and an overall better experience. The negative blasts against Comcast were well known. In 2007, the American Customer Satisfaction Index found that Comcast rated lower than the Internal Revenue Service in terms of customer satisfaction.

Changes had to be made. And it was during our conversation with Peter Intermaggio, Comcast’s senior vice president of communications, that we talked about the company’s initial directional shift. “You had to start with the point of view as to where the industry was going,” he told us. “Where technology was going, and most important, what customers would want and need in the next one, three, five, ten years. You had the maturation of the satellite companies into the Direct TV and DISH brands happening in the 2000s. Suddenly the cable companies had real competition, not to mention old infrastructure, key among the causes of poor customer service. Cable companies like Comcast began losing customers to new entrants like AT&T and Verizon Fios.”

It was against this backdrop that Comcast made the big bet to make a big investment in network technology, products, and customer service. It took on the installation of an enhanced fiber optic network with more than 145,000 miles of fiber, a network that now provides highspeed and high-definition (HD) services to twenty-nine regional networks in thirty-nine states. Readily scalable, it is the basis for Comcast’s Ethernet, Internet, and phone solutions. It has raised the bar within the industry for high-speed Internet, while also substantially increasing on-demand offerings and the number of HD channels available and essentially enabling all-digital video services. At the culmination of this effort, in 2010, Comcast introduced the Xfinity brand to represent its shift to this vastly improved experience above and beyond cable.

“The decision to call this new experience Xfinity was to signal that this wasn’t your grandfather’s Comcast,” said Intermaggio. “It was a vastly improved product. It wasn’t a difference in degree. It was a totally new kind of experience. We had been competing in the market as Comcast Digital Cable and it just didn’t convey the new vision. The Xfinity name stood for three things: cross-platform, infinite content, and always improving. We knew that we would continue to make investments in digital and network infrastructure. The most important and recent of these improvements was the introduction of the X1, which has resulted in a completely transformative user experience.”

As Intermaggio explained, Comcast was a company that had fallen behind in the industry. It had to make the shift, requiring huge investments, if it wanted not only to stay competitive but to lead in its industry. “It is the very nature of technology that it is always improving. Our brand had to demonstrate that its improvements were real and substantive with absolute customer benefit. We could not have made the experiential shift we did without the new infrastructure,” he said. “We could not possibly have competed in today’s marketplace against the very strong offerings from our competitors, new entrants that we face every day, from Amazon Prime [Video] and Netflix to Google Fiber. We now operate in this really beautiful ecosystem of programmers, content developers, producers and writers, technology companies, and distributors. The velocity in our industry has increased so greatly. I cannot imagine competing against this broader set of competitors as Comcast Digital Cable. What we did gave us the ability to not just compete, but to reshape the direction of the industry.”

While Comcast gets credit for helping to reshape the cable industry, another corresponding shift in direction was happening inside the company. And it was about this that we spoke with D’Arcy Rudnay, executive vice president and chief communications officer at Comcast. “One of the shifts we undertook was going from Comcast Cable to Xfinity and integrating NBCUniversal. The broader shift occurred after this acquisition. We are now in the media and technology business. Technology is reshaping the way all consumers look at the products they use. At Comcast, improving customer service is essential. Every time you go online, every time you turn on the camera in your home’s security network to watch a baby in the crib, every time your child is studying online, every time there is a crisis in the world, people are depending on our products. One is TV and the other is the Internet, whether the screen is the television, an iPhone, an iPad, or a computer. Being able to get the content they want and need is essential to [people’s] lives. They depend on us for the news and entertainment they love. Our purpose is to create and deliver moments that matter for our customers,” she said, “whether that means creating or delivering video content, developing products like high-speed Internet or home security, Wi-Fi, or wireless phone. As a media and technology company, we want to deliver on this better than any other company.

“Here’s the journey we took,” Rudnay explained. “First, we had to take on the basic cable experience, fix the infrastructure, and improve the customer experience. We did that. We are now focused on the next chapter, a shift that means looking at our company through a broader lens. As Peter [Intermaggio] told you, the X1 experience is something that we’d been working on for at least eight years. It was our effort to create a product that blended television and the Internet but, more importantly, that reflected our understanding of what consumers want in terms of easy-to-use navigation, finding the content you want, that uses all the technology of the cloud to make the experience astounding.”

These transformative shifts in direction required more than financial investments. Comcast management also determined that it required a transformation of the company’s culture, which meant importing new talent that could fill in the gaps in skillset and mindset. In our conversation Intermaggio described the cable industry as a “a very insular industry” and “somewhat self-contained.” Comcast made critical hires from outside the company, including the recruitment of Chris Satchel from Nike to be chief product officer, who introduced new ways of thinking. When a ping-pong table arrived on the fifteenth floor of Comcast’s corporate headquarters in downtown Philadelphia, it was another signal that the company was embracing the trappings of a more innovative culture. As of today, software nerds and data geeks are key among the thousands of employees. In 2015, Comcast began stamping its remotes with the words “Designed with love in Philadelphia,” an homage to Apple’s slogan imprinted on its iPhones. More than this, Comcast is building a skyscraper next to its headquarters that will be the largest building in Philadelphia when it opens in 2018. The sixty-story “laboratory,” designed by the same architect behind Apple’s new campus, will serve as an incubator for start-ups and the workspace for Comcast’s engineers and designers as well as a new Four Seasons Hotel.

“You’ve got one shift on top of another shift,” said Rudnay, “which is Comcast moving from the vertical notion of cable to the broader definition of media and technology and delivery. So many people identify us as just a cable company, but we’re not. Through NBCUniversal, we own Universal Parks and Resorts, DreamWorks Animation, Universal Studios, NBC, and Telemundo Broadcast Network and cable networks. The innovation that Comcast has brought to market at scale has now set the standard for the category.”

And this brings us back to the 2016 Olympics in Rio, during which Comcast partnered with BuzzFeed to offer 6,000 hours of programming in seventeen days and to create more interactive experiences with viewers using Snapchat, Twitter, and Facebook. It used the Olympics as a way to showcase its new abilities, to give it dimension and bring to life the power of its transformation from a cable company to an innovative media company. The Olympics was a deliberate and strategic activation point in terms of Comcast’s shifts in direction. It was a pivotal “moment that mattered” because it enabled the company to communicate what it now stood for after the shifts of massive scale and complexity that took place over many years. Not the least of its efforts was the rebuilding of an infrastructure that could support these shifts in terms of making good on its new promise. Among Comcast’s current challenges is demonstrating that it provides good customer experiences and making the experience better than ever before—and in the process repairing its reputation for customer service.

Comcast turned itself around and changed directions in a very wide arc. From all indications, it is betting on its new infrastructure, and its new cultural disposition, to support even more shifts in the years ahead. First of all, as sales of X1 increase, Comcast is betting customers will keep paying for cable programming if they can get more benefit from it, and if it’s easy to use. It continues to add video options from other sources, including Periscope and Facebook Live, so users can watch live concerts filmed by friends on their phones. As for the future, as more household appliances, from washing machines to thermostats, garage doors to alarm systems, are connected to the Internet, Comcast wants its customers to be able to manage this “Internet of everything” through all their screens, no matter what size. As CEO Roberts stated in an article on Bloomberg’s technology site, “This is a new world. You have to reset your definition.”¹⁷

BP:
A Lesson Learned

Let’s address the elephant in the room that appears when we talk about the global energy company BP: the tragic Deepwater Horizon incident and the 2016 Hollywood movie of the same name that describes itself as “based on true events.” The movie generally sticks to what actually happened on April 20, 2010, when an oil rig owned by BP exploded in the Gulf of Mexico, killing eleven people, injuring many more, and creating an environmental disaster of epic proportions. The filmmakers’ focus primarily on the oil rig workers and the spill’s impact on their lives and the environment turns the audience against BP, by revealing in the epilogue that not a single employee of BP or Transocean, the private contractor operating the rig, were ever prosecuted for their involvement in the disaster.

While BP never faced any criminal charges, the company did not get off scot-free, either. BP eventually paid a $20 billion settlement for the environmental toll and another $4 billion in a criminal probe. Additionally, BP now had a severely damaged reputation in the eyes of consumers. This event is germane to the theme of this chapter to the extent that it is an example of how extraordinarily challenging it is for a company—especially a company as large in scale and scope as BP—to take on a dramatic shift, and more specifically, to take an intellectual brand concept and try to shift it into a business strategy.

As the last story in this chapter, it is a cautionary tale. BP’s intention relative to this shift was extremely laudable and forward thinking. It was the first big oil company to acknowledge the link between man-made carbon emissions and global warming. However, it made a fundamental mistake in delivering on its new promise. BP wanted to expand its purpose into supplying new environmentally friendly energy solutions. BP made the change to give itself an edge over other oil companies, to prepare for a future without oil dependency so that BP stays relevant, and to “gain a seat at the table” when environmental regulations increase.

In the spirit of transparency, we begin the story of BP’s shift in direction by saying that the company Allen worked at, Landor Associates, helped BP with this program. At the time, Tina Orlando, currently a partner at Indelable, was one of Landor’s clients at BP.

In the late 1990s, BP’s CEO, Lord John Browne, came up with the idea to forge a new kind of company around the merger of several well-established brands, chief among them British Petroleum, Amoco, Castrol, and parts of major oil and gas companies such as Mobil and Arco. Browne charted a course for how the new direction should be communicated both internally—to BP’s thousands of global employees—and to the external markets through powerful branding and marketing. Browne did not want BP to be seen as merely one of the best petroleum companies in the world; management wanted BP to be known as one of the best companies in the world.¹⁸

We begin with a condensed passage from Lord John Browne, the former BP CEO, taken from his 2015 book, Connect: How Companies Succeed by Engaging Radically with Society:

His idea was to move from being driven by the traditional physical assets of a petroleum company to using knowledge and innovation to create future value beyond petroleum. Through its work with agencies Ogilvy & Mather and Landor, the “beyond petroleum” concept was meant to be much more than a tagline. It was to be a North Star, a clear direction for all of the company’s initiatives. Browne wanted BP to be known as the first mover in the energy category in terms of grasping the implications of climate change, and he wanted to demonstrate that the company was able to do something about it. The now-famous yellow and green Helios logo, the evocative representation of the “beyond petroleum” brand idea, signaled BP’s determination to be differentiated from its competitors, at the same time highlighting its overarching mission to be a leading energy solutions provider and a good global citizen. Internal brand experience sessions were organized to help the new BP’s tens of thousands of employees understand this new mission and their role in bringing it to life.

The problem for BP was that it was so anxious to get the word out and to be seen as the first mover among energy companies into this non-carbon-based world that management forgot to equip the company to actually make the move. It became a branding activity without the substance to deliver upon the promise being made.

According to Orlando, “The internal and external brand engagement activity continued for years after launch. Internally we were up against the complexity of integrating, culturally and operationally, up to five different companies . . . and multiple internal business units, trying to get them all aligned around something that was new to everyone. It was especially hard for the 50 percent of them who were legacy BP people. Here’s one of the biggest industrial companies in the world deciding to make a significant shift in what they stood for. The number of people that we needed to reach was massive. In theory, creating a new idea everyone could rally around was good. It was the right theoretical answer. This indicated the dawn of a new era for the company, which believed that the oil and gas industry had a new level of responsibility. They had to change, the old way of operating being no longer acceptable.” The problem was that they spent more time telling people, inside and outside the company, that they were changing than they did actually changing.

To say that a lot of competing energy companies were shocked at BP’s new branding strategy, let alone the business and policy challenges it would bring, was an understatement. “They called it ‘leaving the church,’” Orlando said. “It was obviously a deeply aspirational idea. But the notion of being ‘beyond petroleum’ for an oil and gas company was inherently a paradox. It was easy for investors not to understand it. Analysts’ initial response to Browne was that he couldn’t ignore his core hydrocarbon income stream. I think it gave those in the industry and on Wall Street an opportunity to doubt and to question. Looking back, the use of this audacious idea was probably a good thing. But the brand idea was complex—it was greater than the sum of the parts.

“The tangible delivery of the idea, being able to drive ‘beyond petroleum,’ was even more complex,” said Orlando. “It was hard enough to explain, and it was going to prove exponentially harder to do. You told people you were going to move to something new, but it was so difficult to fully define what this new was, and while there were pockets of examples across the business, it wasn’t standard practice everywhere. It was subject to huge interpretation. You can have the best brand idea in the world, but people didn’t get how to operationalize it, and it was hard to standardize at scale. Even though we communicated our approach as ‘It’s a start’ in advertising campaigns, we had raised expectations to the point where stakeholders were looking for the complete package, fully baked and ready to go. The reality is, it takes years for any company to achieve a change on this scale. That said, the company received multiple awards and accolades for the brand, it gained huge traction in numerous rankings, and was the leading industry brand for several years after launch.” Ultimately, the expectations it created were not met.

“If you’re setting up expectations for a new company direction, remember—it’s got to be balanced with the industry you’re in and the public perceptions of the industry,” said Orlando. “BP was trying to do something new and be responsible and engage with society in a way no energy company had ever done before, but they almost got punished for it because the perception by some was that it was disingenuous, especially around the notion of trying to be green or greener. They devoted lots of time and resources over many years to provide concrete examples of behavior, initiatives, funding, positions, and policies that backed up ‘beyond petroleum.’”

But it was too late. To have to go into the nuances and complexities of turning an oil company into a business promising to go “beyond petroleum” was daunting. New technology, expertise, and culture had to be created. Eventually, reality set in and due to the confusion, BP eventually moved away from the “beyond petroleum” concept. The CEO who inspired and drove the brand left the company in 2007. This change in leadership significantly stalled the momentum that had been built over the previous seven years; the commitment wasn’t there any longer at the top to continue supporting and investing in the brand.

The lesson, from which all companies can learn, is that you cannot make a promise unless you are ready to deliver on that promise. BP is still paying the price of a broken promise, both financially and from a brand equity point of view. The positive news is that in looking at available data, even though BP went through this tremendous challenge, in general the brand is still leaps and bounds ahead of other energy companies in green initiatives. In taking on such a bold shift in ideas—going from fossil fuel to non-fossil fuel—the company definitely did many things right. Some of it may eventually pay off.

In his book, Browne remarks:

Lessons Learned

This chapter described a variety of company shifts. They range from Katz’s Delicatessen, an enterprise that shifted gears merely by opening a new store and promoting the business using new media, to Comcast, an organization that made a wholesale shift in direction by both getting into the content creation business and upgrading the infrastructure for delivering content. The other companies discussed in this chapter fall along a continuum between the extremes. IBM presents an interesting example that has elements of both. It has changed its DNA by getting into new industries and acquiring the new skills needed. At the same time, IBM views itself as having adhered to its stated purpose of solving problems for customers. But then, isn’t the purpose of every business to solve problems for its customers?

The myriad companies along with the scope of shifts described in this chapter provide us the opportunity to draw some interesting generalizations about shifting gears and/or direction. In every case, the marketplace changed, social or cultural or political dynamics changed, technology changed, and the companies we studied had to power up for one reason or another.

For example, in his mission to immediately jump on the new ways to keep people connected—unambiguously—Mark Zuckerberg knew that it was essential for Facebook to embrace mobile early on. It would expand and optimize the user experience. As Facebook turned its focus to its mobile app in 2012, it tapped into a huge market of businesses eager to reach consumers. “People are moving to mobile. . . . Marketers know people are on mobile. The average American consumer is checking his or her smart phone 150 times a day. If you need to reach people, you need to be where they are,” Sheryl Sandberg, Facebook’s chief operating officer, said in an interview with CNBC in September 2016.²¹ In 2016, Facebook added over 270 million new mobile users who log in at least once a month. Of its 1.79 billion monthly users across all platforms, 93 percent are on mobile.

In other cases, you may recognize that if you keep barreling down the road you’re on, things will only get worse. It’s not a matter of powering up or down while staying the course. You need to shift direction. But, which way do you go? Sometimes the markers are clear, with a very obvious path. Oftentimes, there are multiple options. You can go left or right or, as the Scarecrow in The Wizard of Oz says when he tries to guide Dorothy down the Yellow Brick Road, sometimes people go both ways. The very first thing you must ask in this case is, What are your organization’s real assets and skillsets? What’s in your DNA that will enable you to deliver with credibility? In other words, where can you go and effectively play and win? This leads to our first lesson from this chapter.

Lesson #1. Respect your DNA. Science refers to DNA as the building blocks of life. Deoxyribonucleic acid, DNA, contains the genetic codes that impact what we look like, how intelligent we may be, the extent of our athletic abilities, and to some extent, even our personalities. DNA determines who we are. Of course, we make decisions about our lives, but those decisions are constrained in part by our genetics. For example, both authors are basketball fans; both of us played as kids. However, our DNA dictated that neither of us would grow to the height of six feet (Allen is five foot eight, Joel is five ten). As such, neither one of us could reasonably choose to pursue a career in professional basketball.

Like people, companies are imbued with DNA that govern their choices. Part of the DNA is tangible (e.g., technology); part is intangible (e.g., company culture). Facebook connects the world; Hasbro has relationships that allow it to provide entertainment; IBM solves problems; Cheerios provides health benefits through oats; and Katz’s Delicatessen delivers a blockbuster sensory experience through sight, smell, and, of course, taste. Any shifts they make have been and must continue to be guided by their DNA; i.e., who they are. When you stray, you run the risk of not getting back on track. This led to the problems faced by Barnes & Noble and BP. BP in particular made a promise that it did not yet have the DNA to deliver.

Kodak provides another example of a firm that might have fared better had it respected its DNA. Earlier in the book we discussed Kodak’s failures in the light of the golden handcuffs they found themselves shackled with. However, that is only part of the story. We discussed earlier that Kodak did not have the mindset to accept that film was on its way to obsolescence. The irony here lies in what was a mismatch between what they knew and what they acted upon. Jim Patton told us that Kodak had some first-rate technical forecasters, one of whom actually nailed the major shift from film to digital right to the year when it happened. In the aftermath of one board meeting, the chairman, Kay Whitmore, described a major philosophical or strategic discussion on Kodak to Patton. The discussion surrounded the question as to whether Kodak was an imaging or a chemistry company. The board answered the question in the wrong way. They decided that Kodak was an imaging, and not chemistry, company. Patton’s view was that all the competencies of the company were chemistry. Kodak just happened to be a chemistry company that made really good imaging products. After making the wrong decision in the boardroom that day, Kodak sold off the chemical business and focused on a business that they lacked the basic DNA to compete in.

Lesson #2. As time passes and markets welcome entrants, segments emerge and products must become more specialized—and firms must shift to adapt. Both authors like to play tennis, basketball, and run. Neither of us is as good as he thinks he is. Yet, in a series of vain attempts to recapture a youth long gone by, the floors of our closets are full of tennis shoes, basketball shoes (one pair for indoor and one for outdoor courts), and multiple pairs of running shoes (road trainers, trail shoes, and racers). The irony is that fifty years ago when we engaged in those same three activities, we each only had one pair of shoes—the iconic Chuck Taylors. That’s all anyone had. Joel recently visited the Basketball Hall of Fame and saw the NBA all-time leading scorer Kareem Abdul-Jabbar’s Chuck Taylors on display.

Then came the transformational year 1972, and Phil Knight, in partnership with the University of Oregon track coach Bill Bowerman, introduced the Nike Waffle shoe, so named because its sole looked like it came out of a waffle iron. At about the same time, Adidas introduced the now iconic Stan Smith tennis shoe, and the world of athletic footwear was never the same again. Models and designs proliferated. The market was no longer a “one size fits all.” Different athletes needed different things from their shoes. Some companies, like Babolat for tennis and And1 for basketball, even tied themselves to one and only one sport.

Lindblad was focused on delivering exploration-type experiences but needed to further “specialize” to effectively differentiate. By teaming up with National Geographic, it can now offer exploration-type experiences guided by an authentic scientist, and aboard a Lindblad expedition ship the photographer who helps the guests take pictures of breaching whales is the same photographer who shot the whale picture for the cover of the magazine.

CNN finds itself in the same circumstance. If CNN is going to remain a premier provider, it has to make sure that it has the free digital Internet component. To maintain its reputation, it also has to keep its core business strong, which is being able to report from the small villages where news happens around the world. CNN’s goal must be to figure out how to make digital content so irresistible that it will be seen as a must-have service in each and every medium that consumers use to access the news. This will require a significant shift in its content model: to find a way to create relevant news stories for a generation that has different expectations from content while keeping in mind what CNN really is—journalists bringing the public the inside story.

Lesson #3. Update your marketing to conform to and reflect current social norms. This is hardly new, but it is still worth saying. Cheerios updated the people in its advertising to reflect current family structures (e.g., interracial couples), which is the kind of thing that keeps iconic brands relevant for decades. Betty Crocker has evolved through the years. In 1936, her personification had pursed lips, a hard stare, and graying hair. Today, reflecting a different social norm and the role of women in America, she doesn’t look a day over thirty-five. Her image is that of a young professional woman who uses Betty Crocker products to save time without sacrificing quality. Coca-Cola has kept its brand iconic by associating with some of the most wholesome American cultural images of its time, from Norman Rockwell to Santa Claus to Kit Carson to Eddie Fisher to Ozzie and Harriet to Bill Cosby. Bill Cosby? Did we say wholesome? Well (LOL), we thought so anyway!

Lesson #4. Shift involves more than meets the eye. Remember that Alfa Romeo that we alluded to at the chapter’s outset? That car that Dustin Hoffman shifted so wonderfully driving on the California highways had a lot going on under the hood. To shift gears there is a complex transmission with an intricate mechanism linking it to the shift in the car. Similarly, when Dustin Hoffman uses the steering wheel to turn and change direction, it is not only the wheel that has to work. There is a steering column, axle, and wheel alignment that have to function as well. It is obvious that IBM’s shift from manufacturing to service and Comcast’s shift from signal transmission to signal delivery require huge changes under the hood, so to speak,

However, less drastic shifts often involve large-scale retooling. The changes in promoting Cheerios are more the exception than the rule. For example, in 2010 Red Lobster was positioned around high value. The restaurant chain implemented numerous promotions of the “all you can eat” variety. Spurred by some informative marketing research, the company’s CEO, Kim Lopdrup, decided to shift its positioning from value to freshness and an upscale quality.²² Gone were the specials; gone were the fried shrimp; and gone were the freezers that stored frozen items. In their place were new wood plank ovens, new higher-end chefs, new procurement processes, more knowledgeable servers, and renovated restaurants resembling something you would find on the New England coast. Red Lobster did not change industry (it is still a casual, table-service restaurant) and it did not even change the sector that it competes in (seafood). Yet the engine under the hood got a complete overhaul. If you think about the complexity behind what seems to be a minor repositioning, then what is involved behind the IBM and Comcast shifts defies imagination.

Lesson #5. Sometimes the best moves are the ones you do not make. Jake Dell and his family have been very cautious in shifting from the core Lower East Side restaurant. They had numerous opportunities, including Las Vegas hotels. They declined all of them largely because the opportunities did not respect Katz’s DNA. Furthermore, as the previous point highlighted, shifts require resources, even those that are simply shifts in positioning. Firms should not undertake anything that will absorb too many resources, either people or money. For instance, Barnes & Noble might be in a better position today had it not chased after the tablet business with its Nook, defraying costs, and instead doubled down on figuring out how to make its core retail business work more effectively.