Asymmetric Marketing

Self-Defending or Self-Defeating? Cisco's Brand Vulnerability

Anytime you see a market share leader on the verge of a potential loss of reputation equity, it's a rare opportunity for its competitors to go on the offensive and exploit the actual or perceived vulnerability. These days, it has got to be a great time to be a Cisco competitor.

I'm not simply talking about the potential loss of reputation equity based on the recent theft of Cisco's core intellectual property, their IOS operating system, I'm talking about the inherent vulnerability in their entire branding strategy built around their concept of 'self-defending networks'.

Cisco's 2004 brand promise is dependent on the success of their self-defending networks initiative and associated branding campaigns. The basic idea of a 'self-defending network' is that security capability must become an organic ingredient of the network, designed into it at every level. One obvious question for competitors to be asking now is this: "How self-defending can a Cisco-powered network be if it's key operating system is in the hands of international cyber-criminals?" Answer. Not very, so please buy our stuff instead.

But an equally important question and the one Cisco marketers need to be asking themselves is this: 'Was 'self-defending networks' a smart brand promise for Cisco to be making in an age of always-on hacker attacks?'My own view...So glad you asked. It's just plain self-defeating for a marketer of Cisco's stature to lead with a brand promise that is inherently this vulnerable. Didn't their marketing leadership pay attention to the wave of hacker attacks and security guru negative comments on Oracle's 'Unbreakable' ad campaign? I guess not.

But Cisco's problem is more than just a marketing tagline.

When your core intellectual property is stolen, calling into question the underlying brand promise, you want to get out in front of the situation, as did Johnson & Johnson executives during the 1982 Tylenol scare.

To date, I haven't been able to find a single press release issued by the company on this issue of the IOS theft. Here's the Cisco news page.............if you find one that I missed before today let me know. In fact, the theft was first reported on a message board and only later confirmed by the company with the following comment: "It appears that this occurrence was not the result of any exploitation or a vulnerability in any product or service offered by Cisco to its customers, nor do we have any reason to believe that it was the result of any malicious action by any Cisco employee or contractor." Uh no.....but we're talking marketing now so it's not the reality but the perception that counts.

While this is not in the same ballpark as the Tylenol scare (yet), the absence of any corporate communications and pro-active reputation defense that gets out in front of this issue points to an even bigger problem in Cisco's operating culture. The lack of response is particularly problematic when you read commentary like this one from Gartner pointing out the simple fact that the source code theft, while perhaps not immediately dangerous on the scale of a Windows code theft, poses a potential threat to enterprise networks, and recommends IT professionals take defensive actions.

A company driven by a culture of asymmetric marketing would immediately escalate this issue to executive priority status, accept the worst case scenario as fact, speak with candor to the marketplace, self-organize internally across multiple departments, and own the marketing, brand and crisis communications issues arising from this serious breach. It would become a 'self-defending enterprise'. But I don't see that.

So in the absence of a concerted communications strategy driven by a candid operating culture, the industy trade press is left to criticize Cisco for its lack of responsiveness or speculate on the potential outcome.

So what are the back of the envelope lessons for up and coming asymmetric marketers?

Lesson 1: Asymmetric marketers target competitor vulnerability. If you compete with Cisco, GO HEAD-TO-HEAD NOW. Don't miss the opportunity to showcase your security products or network infrastructure in this time of vulnerability.

Lesson 2: Don't do product attribute-based branding, like 'unbreakable' or 'self-defending'. Instead, sell an intangible vision of the future with related emotional association like Microsoft's 'potential' campaign. It leverages what Sun Tzu calls 'formlessness'. Harder to attack in a crisis.

Lesson 3: Murphy's law is operating alongside Moore's Law and Metcalfe's Law. Asymmetric marketers are prepared for massive uncertainty and activate their operating culture to defend their reputation in all potentially damaging circumstances. Cisco has not done this, or if they have, it's invisible. Hey I'm here to help so call me Mr. Chambers before one of your competitors does.

Yahoo Goes Asymmetric on Insurgent Competitor

Cnet News.com has reported yet another dustup in the ongoing instant messaging (IM) wars waged between and among the major portals (Yahoo, MSN, AOL) and emerging technology insurgents attempting to mine the potential opportunity to connect instant messaging users across these closed or proprietary networks.

In this current skirmish, Yahoo has counterattacked against upstart Cerulean Studios and its Trillian software effectively locking them out the Yahoo network by changing the IM protocols, a page from the Microsoft play book.

As I indicated in part 3 of my Microsoft blog, the ability to lock out competitive encroachments is an important characteristic of an asymmetric marketer seeking to defend and extend a customer lock-in. In this case, Yahoo took the moral high ground citing 'spim' (spam instant messaging) as its motivation in taking the steps it did against Cerulean. Needless to say, Cerulean counter-attacked by issuing a patch to get around the lock-out.

Stay tuned because these moves highlight an ongoing war by Yahoo, MSN and AOL who all effectively run closed community networks and seek to defend their installed base of IM users. But it's fun to watch both sides in this skirmish engage in asymmetric marketing strategy and tactics.

Cerulean, for its part, is engaging in a classic ecosystem attachment strategy by attempting to infiltrate the installed base of Yahoo users, while also practing a general overlap strategy that says to IM users, 'We can liberate you from the closed networks.'

If history is any indicator, the big three portals will try to figure out a way to unite to pre-empt the insurgents, as they are doing in the war on the spammers. But the wild card is the enterprise, which needs to adopt IM and will eventually not submit to be constrained by duelling portal standards.

R.I.P Comdex, A Casualty of the Marketing Revolution

One of the most telling indicators of the tech industry's entry into the age of natural monopoly-driven asymmetric marketers is today's announcement that Comdex is no more (at least for the time being). As someone who started attending Comdex in 1982 while I was still in corporate marketing at AT&T, I have to say that I will miss having an excuse to go to Las Vegas and behave badly, stay up all night, and inadequately shave an entire side of my face prior to a client meeting the next morning.

The decline and ultimate 2004 cancellation of Comdex is really a metaphor for the revolution underway in technology marketing, a revolution I refer to as asymmetric marketing. Like the revolution underway in the modern military of many nations, the revolution in marketing is culture and technology driven and focused on recovering from the destructive consequences of the tech bubble, while learning from and applying the best practices of natural monopoly market warriors like Microsoft, eBay, Cisco, Intel, and others in order to pre-emptively lock-in customers and lock-out competitors.

In this context, the diminished value of an event like Comdex is self-evident. Let's look at a few things asymmetric marketers and emergent market insurgents are doing with their marketing dollars and the human bandwidth of their sales, biz dev and marketing teams.

1. Customer & Ecosystem Conferences: Asymmetric marketers don't like sharing the attention of their prospects and customers with competitors. They invest in their own customer and partner ecosystem conferences where they can advance their own agenda and attempt to gain forward revenue visibility from key customers and partners. Even market leaders in relatively mature market segments engage in this practice, e.g. Phoenix Technologies, a leader in the PC and device firmware market. It allows them to meet regularly with key accounts, capture attendee trend data and consolidate their position in the ecosystem.

2. eBusiness Networks: Asymmetric marketers invest in e-business and e-commerce to maintain both direct and indirect relationships. They enable channel partners to login to secure 24/7 support sites, hold conversations with other partners, and provide a 1:1 framework for locking in a key relationship. Here's a link to Intel's Channel Partner website, one of the core exhibitors of Comdex for years who dropped out of the expo recently.

3. Web Conferencing: Webex' ongoing success and Microsoft's acquisition of Placeware are due primarily to the upsurge in usage of online conferencing tools by sales, marketing and service organizations. With frequent webinars on every conceivable topic, why do I need to sit in a room at Comdex and listen to a digital pundit when I can do it over the web while I'm actually multitasking and working on something else. Better use of human bandwidth.

4. Preware: The sales models of many companies in the software industry have been turned on their heads by the native ability of the web to deliver downloads of software, and trial subscriptions to web services on the Saleforce.com model. I call it 'preware', i.e. an inversion of traditional sales model from 'sell/distribute' to 'distribute/sell'. With pre-ware, you can pre-prove your product ROI and don't need a mega-show like Comdex to sign up a bunch of 'resellers'. Comdex, by the way, originally stood for 'Computer Dealer Expo', i.e. Comdex for short.

5. Continuous eMail Conversations: Legitimate email marketers and their service providers can maintain opt-in conversations with customers and prospects and gain valuable feedback that goes right back into a CRM database to create a continuously refreshed profile. How relevant is a really good looking 'booth babe' from a Las Vegas agency in that context. OK, I take that back. But seriously, this age of web-based market conversations is a gigantic 'creative destruction' wakeup call for folks in the general purpose marketing events business.

Asymmetric marketing has come of age, but I will miss the look-alike models at Comdex. Oh well there's always CES.

Part 10: Asymmetric Marketing, Microsoft Style: Brand Warfare

This is the final installment in a 10 part blog on Microsoft as a practitioner of asymmetric marketing.

10. Brand Warfare

In the post-bubble, post-9.11 period, more than a few brands have been hit hard by crises of ‘reputation’ that, if not dealt with effectively, lead to a loss of brand loyalty and brand value. While each of these cases is unique (Martha Stewart’s insider trading scandal, Enron’s collapse based on it’s off-balance sheet accounting model, and Andersen Consulting implosion based on their association with Enron) they point to the fact that brand and reputation are joined at the hip and that asymmetric marketers need to implement brand warfare strategy that assists them in coping with reputation crises. In today’s sandstorm economy, even a CEO dismissal or revenue restatement can effectively harm a brand, e.g. Computer Associates or Nortel.

Which brings us to Microsoft. Since the mid-90s, Microsoft has experienced wave upon wave of reputation attacks (the DOJ proceedings, the State proceedings, the Sun lawsuit) while scores of anti-Microsoft websites call Bill Gates everything from the anti-Christ to Barney the Purple Dinosaur. There is even an anti-Microsoft webring that will link to and provide traffic for any website that is created to attack Microsoft’s reputation.

Despite these attacks, Microsoft has continued to maintain high brand positives as expressed in both brand value and brand contribution to market capitalization. How can this possibly be if the company’s ethics and leader are under constant blistering attack?

Microsoft understands that an asymmetric market leader must always defend its reputation and so must pay close attention to brand warfare on a 24/7 basis. Microsoft is a true ‘brass knuckles brand’ that must defend it’s reputation in any market circumstance. The company has in fact ‘grown up’ with conflict as the norm (dating back to it’s first regime change action against IBM for control of the PC standard) and has learned to cope.

While Microsoft employs many best practices in brand warfare, my favorite is their recent emphasis on what legendary asymmetric warrior Sun Tzu called ‘formlessness’. In the domain of brand warfare, formlessness means focusing on brand intangibles that make it more difficult for attacks on your company's reputation to succeed with customers and target audiences. Here’s 3 examples.

Formlessness as Defense: When Microsoft is attacked by competitors (or government agencies acting on behalf of their competitors) they defend their asymmetric marketing strategy (including category regime change, customer lock-in, and competitor lock-out) by simply and repeatedly stating that they must retain the right to ‘innovate’ on behalf of their customers. Innovation is a powerful intangible (almost archetypal) theme that will ‘hold’ almost any content you want to project on to it. In fact you might say that innovation as a concept is now the spiritual DNA of both US and western civilization (and has been adopted by China, India, Russia and others). Who dares to challenge it? Here’s Oracle leader Larry Ellison’s attempt to debunk the innovation mantra, which is a pretty powerful piece of messaging in it’s own right, but which was insufficient in defeating Microsoft’s advance into internet computing.

Formlessness on Offense: As Microsoft has expanded its efforts to capture a larger share of the enterprise IT market populated by Sun, Oracle, IBM and others, they’ve articulated a powerful new theme called ‘seamless computing’. The word ‘seamless’, like the word ‘innovation’, is a powerful intangible that implies the problem faced by a world of IT ‘silos’ which do not interoperate to get the right information to the right people at the right time. It provides an intangible expression of the .NET vision in a big way. With this kind of formlessness in it’s arsenal, Microsoft is in position to reverse the verdict on those who have counterposed the concept of ‘open’ against the concept of ‘proprietary’. Microsoft now has the brand ammunition to turn the tables on their rivals, go on the offensive and accuse them of being seamed or proprietary. BEA Systems, a leading independent software provider also focused on the web services market also leverages this kind of brand intangible with their ‘liquid computing’ vision.

Formlessness as Customer Vision: Microsoft has taken the opportunity to leverage their brand building in the SMB space with their McCann-developed campaign around the powerful intangible ‘potential’. In the ‘Your Potential Our Passion’ campaign, Microsoft is basically selling dreams, not software, tapping into the entrepreneurial impulse that is powering the global economy from the US to Asia. It’s hard not to relate to an appeal for realizing your potential.

In addition to Microsoft’s practice of the concept of formlessness in their reputation defense and brand warfare initiatives, they’ve also begun stealing a page from the experiential and/or cult brands in order to beat back the spread of Linux and open source as a potential long term disruptive competitor. It’s called the Shared Source community, and they now have 1 million active IT professional members with direct access to Windows source code. This initiative shows that Microsoft is open to meeting potential asymmetric threats like Linux with unconventional means, in this case, adopting the ‘enemy weapon’ of choice.

The 10 parts of this blog constitute an introductory course in Microsoft's approach to the discipline of what I refer to as asymmetric marketing. While many other tech leaders and natural monopolies have similar approaches to marketing and category leadership, Microsoft stands out as an example of how a tech company with humble beginnings and little financing can leverage pre-emptive strategy, lock-in product models, lock-out business models, R&D-driven market creation initiatives, partner ecosystems, co-evolutionary standards bodies, tribal culture, hands-on leadership, M&A and combat branding to capture and keep an asymmetric advantage over their current and future competitors. The take-away…………have a Microsoft alliance or countermeasures strategy for your company and put your best people onto the battlefield to execute that strategy. As the old saying goes, those that don’t learn from history are doomed to repeat it.

Part 9: Asymmetric Marketing, Microsoft Style: M&A Integration

This is the ninth installment in a 10 part blog on Microsoft as a practitioner of asymmetric marketing.

9. M&A

It's recently come to light that Microsoft and fellow software giant SAP were in merger talks at the end of last year. The decision was not to go forward with a merger because of the integration challenges the 2 companies would face but the two companies agreed to closely connect their respective web services strategies going forward. This underscores another element of Microsoft's style of asymmetric marketing, which focuses on rapid integration and tribal leader oversight of acquired assets.

This Microsoft M&A approach reinforces its asymmetric advantage. They acquire technology that serves as an implant of new digital ‘genetic material’ that catalyzes targeted organic growth in the Microsoft corporate ‘organism’. Here’s a few examples in the key market segments of portal services, SMB applications and web services.

Portal Services: At the end of 1997, Microsoft acquired Hotmail, which at that time was the fastest growing web-based free email service in the world. Microsoft still uses the brand name, 6 plus years later. Hotmail provided Microsoft with an ‘anchor’ application for transitioning MSN from its original proprietary AOL model, to a web portal model like Yahoo. Hotmail also provided a way to bootstrap Microsoft’s Passport single sign-on and identity management technology while providing them with an opt-in list for targeted advertising by MSN commerce providers. MSN is now about a $2.5 billion business for Microsoft, not far behind asymmetric marketer Yahoo which also has grown via acquisitions like Overture and Inktomi.

SMB Applications: In 2000 Microsoft acquired Great Plains, a long term MS partner, to bootstrap their .NET offensive in the SMB (small medium business) market. In 2002, they added Navision, based in Europe, for the same reason. These two acquisitions are still a relatively small part of Microsoft’s business, about $600 million annually, still losing money and still underperforming. But these acquisitions are now receiving the personal touch of tribal leader Steve Ballmer because they have placed Microsoft in the high potential SMB application space while also enabling them to roll out Windows Server 2003 and its multi-year subscription model into a network of new channel partners. I'm convinced that Microsoft will keep working this deal until they get it right and have an SMB applications strategy that really capitalizes on their Windows Server marketing programs.

Web Services: In 2003, Microsoft acquired Placeware, the number 2 behind Webex in the hot online conferencing market. Placeware is now re-branded Microsoft Live Meeting. In his 2003 annual speech to the CEOs of top Microsoft customers, Bill Gates had a top staffer demo Placeware as a core web service for enterprise collaboration. Placeware provides Microsoft with a way to ‘annex’ the conferencing category by integrating other Microsoft applications and web services into and around Placeware. While Webex is still the leader with 67% of the worldwide conferencing market, Microsoft’s reach will widen that market over time and make conferencing more ubiquitous. Webex has to adapt accordingly and decide how to defend itself. It can become another Novell and decline, or become another Adobe or Intuit and capture asymmetric advantage for itself. It will depend on how it develops countermeasures to deal with the Placeware acquisition.

This year, Microsoft has continued down the path of it's 'genetic material' acquisition strategy by acquiring ActiveViews, a small provider of business intelligence and reporting software for MS SQL Server. Look for them to do more of these types of acquisitions, usually from among their base of existing partners.

Part 8: Asymmetric Marketing, Microsoft Style: Cultural Candor

This is the eighth installment in a 10 part blog on Microsoft as a practitioner of asymmetric marketing.

8. Cultural Candor

As the tech industry’s leading asymmetric marketer, Microsoft has created and fostered a culture of candor as a means of enabling market 'self-correcting' in times of competitive threat. In brief, candor means to get real, even if it means eating crow. This is something that you can do with a strong tribal leadership model, something I described in the previous installment. One of the key pieces of evidence I use to support this point of view that Microsoft is a 'self-correcting' enterprise is Bill Gates’ internal 1995 memo to his executive staff, the Internet Tidal Wave. It was declassified and made public in connection with the DOJ actions against Microsoft. The memo provides insight into the thinking of the industry's leading asymmetric marketer and demonstrates 5 key elements of a culture of candor.

The Tribal Chieftan Can Change His Mind
In the memo, Bill Gates alludes to having gone through ‘several stages of increasing my view of it’s (the internet’s) importance’. In other words, Gates was changing his mind. He then goes on to say that the internet was even more important than the arrival of the ‘GUI’. This from a man who made a fortune on the GUI.

Praise for the Competition

A culture of candor acknowledges best practices wherever and whoever they come from. In the memo, Gates praises Yahoo, Adobe, Apple, Sun, Lotus, Netscape and others stating that they are doing some things better than Microsoft including the use of the corporate website for marketing purposes.

Get Out of Denial, Be Mindful of Serious Competitive Threats

In the memo, Gates comments that ‘Browsing the web (circa 1995) you find almost no Microsoft file formats’. He then goes into the competitive meat of the matter. He points out that Netscape is ‘pursuing a multi-platform strategy where they move the key API into the client to commoditize the underlying operating system.’ Aha. Here’s the call to action for the soon-to-commence browser wars. Commoditize---that’s a potential kiss of death for an asymmetric marketer. Gates correctly perceived the opportunity that the internet presented to both Sun and Netscape to marginalize Microsoft. He points out the ‘scary possibility’ that some day there would be a scenario where there were web devices ‘far less expensive that a PC which is powerful enough for web browsing.’

Acknowledgement of Asymmetric Effects

In speaking about Adobe Acrobat Gates acknowledges the law of increasing returns and it’s ultimate asymmetric effect of creating a natural monopoly player in a given category. He writes, ‘Once a format gets established, it is extremely difficult for another format to come along and even become equally popular’. In other words, the only strategy for an asymmetric marketer is to pre-empt a competitor before they become established as a de facto standard. In short, Adobe's free Acrobat Reader got locked-in, we got locked out.

Empower Those With Candor

In his ‘Next Steps’ section Gates points out that he was ‘not alone’ inside Microsoft in stressing the importance of the internet and names those who did, thereby empowering candor. By acknowledging those who exhibited fearlessness in pointing out the potential vulnerability of the company from it’s internet competitors, he is providing a rugged cultural platform for continued innovation at Microsoft. In fact, a book was written about this subject. It’s called How the Web Was Won. It’s mandatory reading for asymmetric marketers.