Article 21 – Building a lasting brand requires a solid business model, ability to reinvent
by Tan Thiam Hock
Since I arrived at the “School”, life has been a rush. Upon arrival, I dropped my bags in a small but well appointed room numbered 41-8 and went straight to the dining table where I met my living group.
A group of very diversified personalities of different nationalities all seven of them. So we make a group of eight. Which I was told, is a good number.
Living Group (LG) 41 is housed on the 4th floor of the north wing with one living and meeting hall and will be together for eight weeks. In Cantonese, 41888 or 88418 when spoken, has the same meaning so far, so good.
After dinner, LG 41 read it’s first case study at 8pm. Another good omen, except for the jet lag. Then the meeting dragged. Phil Knight of Nike Inc. can wait. I have to unpack my bag and hit the sack. I am finally in the hip hop US of A.
Phil Knight is a kampung boy from Oregon and a runner for the University team. His MBA paper was on competing with Adidas in the performance athletic shoe segment with a business model of importing lower cost but high quality shoes from the far east. So he went to Japan, secured a distribution agreement for Tiger shoes in 1964 and by 1972, had a decent business of US$2mil per year. Then Tiger wanted to control his fledging 8-year old company or he risked losing the distribution rights.
He decided then to launch his own brand of performance athletic shoes and Nike was born. In 10 years, Nike went from US$2mil to US$693mil in sales and then in the next 30 years grew to become a US$2 0bil company. Nike b oleh! It is bigger than Adidas and Reebok combin ed and i t still has the same business model.
For entrepreneur wannabes, you do not need a BIG idea to start a business. But you do need a good and solid idea on how your business model can compete. Blended with intimate industry knowledge, you stand a fighting chance of surviving the early years.
The owner of The Chicken Rice Shop was a pioneer staff of KFC and worked there for many, many years. My company distributed multiple cosmetic brands for some years before we launched our own Silkygirl brand. If you decide to invest in an industry that you are not familiar with, the learning curve will be extremely steep so be prepared for the ride of your life.
Phil Knight never had a grand vision of having his own brand. He was just a small-time entrepreneur trying to establish a distribution business. Without a strong financial base, he relied first, on his principal and later on, another Japanese trading house for financing his imported inventory.
With his back against the wall and out of necessity, he started his own brand. For entrepreneur wannabes, you do not need a GRAND vision when you start a new business. People with grand visions normally spend most of their time day dreaming, with vivid imaginations of beautiful homes, luxurious cars and holidays. Business plans based on personal viewpoints and beliefs are flawed and doomed to fail.
Forecast numbers plucked from the clouds are unrealistic and unattainable. My advice is to start small, think big (margins), stay slim (overheads), avoid fat (hopes) and count right. Then put your head down and get on with the business. Just do it.
In the course of the last 40 years, Nike Inc suffered some hic cups when it had flat sales and profit p eriods but it has always managed to reinvent itself and create another decade of continuous sustainable growth. Nearer home, do you think our local brands like Bonia, Padini, Parksons, The Chicken Rice Shop etc will survive? Where is Anakku? Will Proton still be around in 20 years time?
All over the world, entrepreneurs build brands to last. What happens when the business outlasts the entrepreneur? It is proven that a business/brand, built on a solid foundation of a sturdy and robust business model will last for years and years. The journey of an entrepreneur normally starts with a glimmer of hope, some sprinkling of success, then visions of grandeur and finally the reality of the need to reinvent itself. It is a dynamic world out there. Reinvent or you will just fade away.
To all the vain entrepreneurs, if you have poor vision, put on your glasses so that you can see clea rly, the road ahead. Warning signboards, speed limits, road bumps and potholes. And, may your engine never run out of fuel.