Brand Failures_ The Truth About the 100 Biggest Branding Mistakes of All Time - Matt Haig [76]
Play long. Lehman Brothers was not alone in rewarding short-term share price movements, as though they were the true drivers of value in a brand. Almost every firm in the sector rewarded such spurious performance, but what singled Lehman’s out was the sheer scale of such rewards. In December 2008, Fuld was given the ‘Lex Overpaid CEO’ and ‘thief’ award of the Financial Times for having received $34 million in 2007 and $40.5 million in 2006, the last two years before his bank’s failure.
72 Marconi 1896–2001 and 2005
Marconi, rather like Lehman Brothers, went through several changes of name and ownership before finally returning to its original name in time to die. In Marconi’s case that death was a lingering affair, with the life support machine being finally turned off on 5 October 2005 when Swedish telecoms giant Ericsson paid £1.2 billion for the smart end of the Marconi Corporation empire, comprising its optical networks business producing super-fast broadband and mobile internet. Guglielmo Marconi would have probably been reasonably pleased with that outcome, as at least the technology lived, though the brand was put to rest.
The Marconi’s brand was born on 2 June 1896 when British Patent number 12039 was filed for a system of telegraphy using Hertzian waves. Guglielmo then proudly invited officials from the army, navy and general post office to see his telegraph invention. They were gobsmacked. Messages sent long distances in zero time. It was like witnessing magic. Marconi’s Wireless Telegraph Company was formed in 1900 and it continued in or around its chosen field until it was taken over by English Electric in 1946. More mergers and joint ventures followed and Marconi eventually became the General Electric Company (GEC), run by the much fabled Arnold (Lord) Weinstock, who by the time of his retirement in 1996 had built a multi-billion dollar fortune and global empire.
Seemingly impregnable GEC, run by Lord George Simpson who took over as managing director in 1996 on Weinstock’s death, initiated a major reorganization aimed at refocusing the company on high-growth, high-technology business areas. Simpson planned to use GEC’s billions to reposition it as a high-tech, high-growth, and high-margin company. Unfortunately he chose the high point in both the economic cycle and that of an unproven technology to put all his eggs in one very insecure basket. GEC called itself Marconi again but it didn’t help. The company launched a major advertising campaign in 1999 to change its image from an old industry oriented company to a global telecommunications company, to compete with well- entrenched players such Nortel, Lucent Technologies, and Cisco. But the gamble – and there’s no other word for it – of putting everything down on the table, cost them everything. Las Vegas is a fun place to visit but it shouldn’t inspire your brand strategy.
Lessons from Marconi
Too fast, too furious. Brands take a long time to establish. Marconi put its entire cash pile, a reputed $7 billion, on businesses miles from their original business arena. It soon found that the magic name ‘Marconi’ was not universally transferrable from one business field to another. Even business consumers found it difficult to grasp the shifting sands of Marconi’s proposition.
Don’t confuse cash for brand strategy. Marconi was killed by a failed acquisitions orgy led by its swiftly sacked boss Lord Simpson. It was only saved from bankruptcy by a colossal debt-for-equity swap, after which the banks took control and existing shareholders saw their shares go from £12 to 12p in a matter of days. Ouch.
Value what you’ve got. Like a crazed fad dieter, Marconi wanted desperately to be sexy and relevant. It bet everything on the internet being the next big thing and that their old technology was outdated. It was right about the internet, just hopelessly wrong on timing. Like almost everyone it was a