Wednesday, April 16, 2008

Happy Birthday DARPA

Q: What do you get when you connect “100 freewheeling genius zealots” with a travel agent?
A: You get the government agency that created the blue print for the Internet, sponsored the inventor of the computer mouse, and helped send man to the moon via the Saturn rocket program.

The Washington Post ran an article in their April 7, 2008 online edition highlighting the fiftieth birthday of the Defense Advanced Research Projects Agency (DARPA). DARPA was formed by President Eisenhower in 1958 as a response to the Soviet’s Sputnik launch and as a way to fast track applied research. It’s a unique agency in a world of government bureaucracy – it has only two layers of management and half of its employees are program managers or office directors who are on 4-6 year assignments.

“DARPA will take a chance on an idea with no data. We’ll put up the money to go get the data and see if the idea holds,” said Anthony J. Tether, agency director.

The agency is currently working on two-way speech translation systems which allow a soldier to communicate with and understand anyone they encounter anywhere in the world. They’re also creating a prosthetic limb prototype that uses the brain to control the limb and help soldiers remain in the military without having to be discharged.

So what can we as product managers learn from DARPA?

  1. Even in heavily bureaucratic organizations, innovation can thrive. If it can survive in the Mother of All Bureaucracies, it can flourish in yours. Don’t give up.
  2. Innovation is best done with flat organization structures that enable fast, go / no-go decisions. You’ve got to get the bad ideas out of the way as early as possible.
  3. Innovation is a mix of art and science and is typically not linear. Sometimes you have to go get data to support an idea, rather than having an idea come as a conclusion from lots of data.

Innovation is about big ideas that change the way we do things. DARPA is a great example of big ideas that change the world. Happy 50th DARPA.

Thursday, April 3, 2008

Can Brand Value Be Measured?

No where in marketing do you see the collision between art and science than in estimating a brand's value. The metrics are often subjective and rely on sometimes tenuous assumptions.

But brand value is not insignificant. Interbrand conducts an annual survey for Business Week magazine on brand value. For 2005, the top five brands and their valuations were:
  1. Coca-Cola $67.53B
  2. Microsoft $59.94B
  3. IBM $53.38B
  4. GE $47.00B
  5. Intel $35.59B

But how should a firm estimate its brand value and, more importantly, how does that impact the way they run their business on a daily basis? Two of the gurus in brand valuation have just published a book that provides gives companies a clear road map on how to measure a brand's components so that they can make data-based decisions. Value Creation: The Power of Brand Equity is the new book by William Neal, Past Chairman of the American Marketing Association and founder of SDR Consulting, and Ron Strauss, founder and senior executive of Brandzone, LLC. In the book, they present a common sense approach to brand measurement:

"By taking a representative sample of purchasers in a category through a
specially designed trade-off exercise, we can determine the value of each of
those four major components and their individual sub-components. The model is built at the individual respondent level.

Then, we can manipulate the price in the model so that any one respondent would be ambivalent as to which branded product they would purchase in the category. That, then allows us to calculate the relative price premium that a buyer or potential buyer would be willing to pay for the brand, INDEPENDENT OF the branded product's performance attributes and channel attributes. Given that we have a representative sample, and unit sales volume, we can calculate the total value of the brand in the marketplace.

Furthermore, the output from the model provides very rich diagnostics that identify specific performance and equity issues that are both supporting and detracting from brand performance.

The implications of this Brand Value Model are far reaching - encompassing
firm financial management, new product development, human resources hiring & training, and of course brand management."

Bill's and Ron's approach is applicable to any sized firm. I highly recommend you check out their book and get to know these two practitioners of the art and science of brand valuation. For more information, go to their site: