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Momentum: How Companies Become Unstoppable Market Forces

 
10/28/2002
For your product to be more than a one-hit wonder, customers need to perceive that it has staying power. There are six forces behind the most successful products, according to Ron Ricci and John Volkmann in this excerpt from their new book, Momentum: How Companies Become Unstoppable Market Forces. "Momentum brands are always in motion," they believe.

Here we will give a quick overview of the six forces of differentiation and how they relate to the basic momentum formula. Organized by the momentum variable to which they correspond, the six forces of differentiation are:

  • Brand Mass: Relevance of value proposition, ecosystem potential, and category leadership
  • Brand Speed: Market agility
  • Brand Direction: Brand integrity and management vision

Mass
At the outset of our research, we postulated that mass would be derived from a product's value proposition and its role in the industry value chain. After our research, we defined mass as the ability to create marketplace value—for customers, partners, suppliers, employees, and investors. George Foster, a professor at Stanford's School of Business, interpreted our definition of mass this way: "A brand with 'mass' creates marketplace value independent of itself."' Scott Cook, the visionary behind Quicken and Intuit, described a brand with mass as having a "system of economics around it."  4

In our momentum model, in order to build mass, companies must manage three forces of differentiation relative to competitors and competing categories of products: relevance of value proposition, ecosystem potential, and category leadership (see Figure 2-3 below).

Figure 2.3 Brand Mass

Relevance of Value Proposition

How important is the brand's promise to personal and professional success of its targets?

Ecosystem Potential

How does the product and its category help other companies make money in a customer solution?

Category Leadership

How dominant is the product's position in its given category? How important is the category to solving important customer problems?

Speed
The very fact that all digital products are never finished has ingrained in people's minds the idea that digital products evolve and that, in some perceptible way, the pace of this evolution is accelerating as time goes by.

As a result, momentum brands are always in motion. Executing quickly against industry trends is not enough; they also have to be able to create or manage market transitions to their advantage and respond rapidly to marketplace changes not in their control. A few forward-looking leaders even thrive on disrupting their own incumbent leadership positions. We evolved our initial thinking on what speed means to people and more precisely defined it as those companies that consistently manage market disruptions, transitions, and inflection points for competitive advantage. (See Figure 2.4. below.)

Figure 2.4 Brand Speed

Market Agility

Does the company successfully create or manage market transitions to its advantage?

Direction
Momentum brands project a sense of manifest destiny even as the market around them changes with greater and greater frequency. This sense of confidence is built on establishing direction; that is, articulating a credible vision of the future and its inherent opportunity for all constituents in a given market space. Following our research, we defined direction as the ability of companies to anticipate and execute on the inherent market opportunities that come from the impact of technology on markets (see Figure 2-5 below ). Over the past twenty-five years, the most successful visions in technology have been those most closely associated with dominant company personalities: Apple has its evangelist in Steve Jobs; Microsoft relies on the leadership of Bill Gates; Andy Grove's vision turned Intel into a force

Momentum brands project a sense of manifest destiny even as the market around them changes with greater and greater frequency.
— Ron Ricci and John Volkmann
capable of driving the whole PC industry. In turn, brand personalities have come to more closely resemble the attributes of their CEOs than some contrived personality such as a race car driver or a sports figure. This happens because technology is inherently complex and often achieves what would have been thought unimaginable less than a generation ago (such as the computing power of several mainframes inside a video game console). The CEO's role is to make sense of the technology and its potential impact on people's problems for the customers paying for it. Furthermore, the credibility of these personalities—and part of a brand's integrity—is ultimately tied to how well the company itself leverages the very technology it is evangelizing to customers.

Figure 2.5 Brand Direction

Brand Integrity

Does the company practice what it promises to customers? Can the company be trusted?

Management Vision

In what way will markets be different because of the company and its products? Are the company's leaders credible evangelists for the vision of the market?

Chambers Redux
In April 1998—just past our own ninety-day deadline—we were invited to present Cisco's most recent momentum scores at one of Chambers's executive staff off-sites. During this meeting, Cisco's top players discussed the company's key business initiatives, one of which centered on innovative ways to market the Cisco brand and avoid spending the kind of money Intel—the other hardware giant—had on marketing. Chambers had recently spent time with Andy Grove and had surmised that the brand dollars spent at Intel were daunting compared to what Cisco was ready to spend. Chambers excelled at challenging his company to achieve, in his words, "leverage." This came to mean "$10 worth of results for only $1 spent." Don Listwin, then one of Chambers's top lieutenants, spearheaded this effort earlier in the month. Listwin had seen the results of our momentum work using the six forces of differentiation as our prescriptive framework. It was his idea to present the work to Chambers and his team.

As we waited to give our findings, Listwin summarized the opportunity. Looking at Cisco's momentum results, he told the team, it was clear that the direction of the Cisco brand was job number one. He explained how we had worked together to brainstorm a way to describe Cisco's positioning vis-a-vis Lucent, then Cisco's archrival. This positioning—which would eventually become known as Cisco's "new world" strategy—was the basis for what Listwin wanted to discuss: Cisco's management vision.

Momentum Book Cover

Cisco had plenty of room before its momentum came even close to that of Microsoft and Intel, particularly with regard to the relevance of its value proposition to customers. Listwin hypothesized that before the company's value proposition could become relevant in today's economy, it needed to work in combination with the long-term direction of the brand in what was becoming an increasingly uncertain and rapidly changing world. The "new world" position, in fact, encouraged a sense of disruption that would only be successful if it was put into a broader context of market opportunity.

When it was our turn, we outlined our results and recommendations. In the middle of the pitch, Chambers pushed back from the table and leaned forward with his elbows on his knees, pressing his palms together and studying our management vision ideas. In a few moments we would get the commitment we had sought for the past two years. In short, our counsel came down to this: If "new world" was the basis for Cisco's strategy over the next several years, Chambers would have to become the CEO of something larger than Cisco, we told him. It required him to become the CEO of the Internet Economy; more to the point, he had to proselytize the idea of an Internet-based economy. If the market opportunity wasn't there, why would the world's largest countries and companies choose something other than the "old world"? In other words, momentum—and the $10-to-$1 return—would have to come from him.

In the next few whirlwind years, Chambers would become known as one of the fastest moving and most influential CEOs of his generation. But at that moment, it felt as if it took a lifetime for him to turn to Listwin and say the words we were waiting for: "Let's make it happen."

Excerpted with permission from Momentum: How Companies Become Unstoppable Market Forces, Harvard Business School Press, 2002.

Ron Ricci is Vice President of Marketing for Cisco Systems.

John Volkmann is Vice President of Strategic Communications at Advanced Micro Devices.

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4. Scott Cook, conversation with Ron Ricci, March 1998.