Most discussions about business models don’t involve branding and vice a versa. This is a shame because a well defined brand reinforces a well defined business model. Most technology organizations haven’t spent enough time defining either and the predictable result is that neither scales.
A well defined business model tells you what not to do and what to do better than anything else. This is true of brands as well. These definitions are the guide posts and rails that tell the company how much to stretch or evolve.
So what’s the point? Connect your unique value propositions or identity with the unique aspects of your price and product and voila the business becomes clear and compelling quickly.
Examples: Groupon, Salesforce.com, Facebook, eBay, Symyx, Google, Amazon, Apple.
If you don’t know Symyx, you’re not alone but the company had a real shot at having a unique brand and business model. The fact that Symyx no longer exists speaks to the difficulty of pulling this off.
The Symyx story speaks to the uniqueness of Silicon Valley, the flaws of the big deal model, the difficulty of transitioning technology companies and the power of branding and value selling. Let me take them in order to provide a little context.
This Harvard Business School case study describes $100M+ revenue public company worth more than $700M at the time, full of 100 world-class PhD chemists, 200+ patents in the field of high-throughput chemistry with an IP royalty business model supported by a small software (electronic lab notebooks and informatics) and systems (automated experimentation) business. This company could only exist in Silicon Valley and was both fascinating and unique.
The business model that propelled Symyx to a successful IPO was based on large deals ($150M 5 year deal with Exxon and $120M 5 year deal with Dow as examples) where Symyx chemists would develop new materials and processes for petrochemical and life sciences companies and monetize that IP through royalties on the commercialized technology and supporting software and systems development.
As the company realized the uber big deal model wouldn’t scale, it diversified into big software and big systems deals independent of the IP royalty model. The problem with a big deal model addressing only a few industries, is all too well known—long sales cycles, lumpy revenue and difficulties in scaling solutions and go-to-market activities.
So we embarked on a transition to a more scalable software and systems business model with reduced prices for point solutions. Not everyone was happy about this but this was probably our only option. Over the course of 3 years we went through lots of turnover and several acquisitions that ultimately turned Symyx into a $100M software company (acquired by Accelerys) with a $30M systems business and the original IP business spun-out.
So enter branding and value selling. If you are the VP Marketing at time, you quickly realize that having a stable brand identity and an integrated value selling model are the required to keep 3 business units (that are in arguably different businesses) coherent in the minds of customers and the market.
That led us to rebrand Renaissance Software to Symyx Software and create the ‘donut’. The ‘donut’ was Symyx Software, Symyx Systems, Symyx Research circling Symyx Labs with the header R&D Integration Partner and footer Accelerating R&D Certainty.
This solved the problem of what I called ‘punting on first down’ where when asked who we were and what we did, we initially answered the question with a question ‘Renaissance Software, Symyx or our systems business?’
In other posts, you can read about how we built a value selling framework/roadmap that supported our unique identity as an ‘R&D Integration Partner’ (think IBM for chemistry). By using the integrated model, our good sales people could clearly articulate our differentiation and value and carry revenue quotas that were 2-3X the industry average.
The problem was that it ultimately didn’t work. We never lived up to our identity/brand promise because we never truly committed to the integrated model (vs. 3 separate businesses). It could have worked, but on the other hand, it might have made things worse (miss our growth and profitability targets), we’ll never know. The point is that developing a unique brand supporting a unique business model is hard enough and once you add in the challenges of transitioning the company’s products, market and business model, you get an extremely risky job for the management team.
I can only think of a few successful examples of connecting the brand and business model to support a corporate transition; Apple with Steve Jobs, possibly IBM’s move into services and software, possibly Intuit’s move from personal to SMB software and maybe Google or Amazon as move into the enterprise markets.
The lesson is that 100% alignment with a stable management team is required to pull this off.