tech giants: as you acquire, take note
DESCRIPTION
People, whether investors, consumers or business partners, are less enthusiastic about those things they do not understand. But as companies grow and acquire, however, they often become more complex. In this presentation, we examine how tech companies manage complexity as they acquire new brands.TRANSCRIPT
Marshall Strategy April 2014
Tech Giants: As You Acquire, Take NoteBrand Architecture Advice for Growing Tech Companies
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People, whether investors, consumers or business partners, are less enthusiastic about those things they do not understand. As companies grow and acquire, however, they often become more complex.
In this presentation, we examine how tech companies manage complexity as they acquire new brands.
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Introduction
Challenge: Complexity is the enemy of enthusiasm
Complexity
In Silicon Valley’s entrepreneurial founders’ culture, every startup is the cutest baby in the nursery. Founders seek two things: high valuation by an acquirer, and post-acquisition autonomy.
Google takes in Green Throttle and Nest; Facebook buys Instagram, Oculus and WhatsApp.
What happens next can greatly affect the long term viability of the acquisition, and its parent.
When young brands are acquired without an understanding of how, where and why they fit within their new family, they can create complexity that benefits neither the acquirer nor the startup.
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© Marshall Strategy 2014
Introduction
Challenge: Tech companies often acquire startup “baby” brands
Google has many brands under its umbrella…
…but it lacks a clear system for integrating them into a succinct and cohesive brand expression, and many still stand on their own. As a result, there is very little halo effect—the popularity and appeal of one brand does not necessarily affect preference for its other brands.
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The Google Example
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Google’s brand promise began with its search function. What is it now?
With every other cool new product under a separate brand, Google still stands for search.
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The Google Example
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Everything ElseSearch
The Facebook Example
Facebook has acquired some companies for strategic growth into new markets. These brands represent an additive, non Facebook-using audience, with generally little overlap.
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1.3 Billionusers200 Million
users
450 Millionusers
Facebook could continue to grow this way, but risks cannibalizing the popularity of its flagship brand.
The GE Example
GE has done a great job of maintaining a single master brand across everything it sells—from light bulbs and toasters to aircraft engines and nuclear reactor services. Diverse offerings provide a clear story: The GE brand promise is excellent management and ceaseless innovation. Wherever you see GE, that’s what it means.
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Brand acquisitions follow three common paths. A lack of strategy most often results in the third.
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21 3
The acquired brand is invested in, and strategically linked to its new parent brand.
This model, when managed, can broaden influence or acquire new audiences.
The acquired brand is completely absorbed into its new parent brand.
This happens most often when the acquisition is for technology alone.
The acquired brand is left alone, and over time, the acquirer becomes a “house of brands.”
This model becomes a greater management and a marketing challenge with every acquisition.
What We See Happen
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Complexity
There are several questions a company should ask to guide brand acquisitions and transitions:
1. Where does the acquired brand fit within the larger company?
2. How will the acquired brand deliver on our brand promise?
3. How does the introduction, absorption or extension of a brand affect the rest of our portfolio?
4. How will we invest in, and support these brands over the long term?
These questions must not be thought of in a vacuum; rather, they should be considered within the context of the entire organization.
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Questions to Consider
We see organizations—especially in the technology and digital fields—take a “ready, fire, aim” approach to acquiring new brands.
A lack of strategy around brand at the time of acquisition can produce a complex and cumbersome system of relationships.
When it comes time to reconcile brands and ask the hard questions, many feel they are at a point of no return.
It is vital both for acquiring companies and startups to consider the important questions prior to acquisitions. In doing so, both organizations will prepare themselves to be part of a cohesive brand architecture and well-equipped for clear brand expression.
Conclusion
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