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Let's debunk the myth that 80% of businesses fail within their first year and the remaining 20% won’t survive in their fifth year (of course some fail but the numbers vary). The Fleximize study (displayed below) looked at how companies in the USA, Canada, Australia, and UK performed over a 5 year period.
The study revealed that companies with the highest survival rate were from industries like Healthcare and Education, while Construction and IT had the lowest survival rate. The study identified a few common challenges companies faced in their first 5 years. Let's find out what they are and take lessons from them.
Key challenges in first 5 years?
- Growing revenue (45%)
- Hiring new employees (42%)
- Increasing profit (37%)
- Cash flow (29%)
- Government regulations (29%)
- Raising funding (18%)
- Adding new products (14%)
- Managing inventory (8%)
Other additional factors that contributed to failure were:
- A disconnect from consumers
- Lack of USP (Unique Selling Point)
- Leadership breakdown
- Non-profitable business model
In any startup, the founder dreams of making it BIG and they never imagined that they would one day face defeat. When this type of failure occurs, a real sadness and shock can be felt – it becomes a haunting nightmare for them to understand where they went wrong and how they could have done better. They spend many years wondering how legacy brands survived and what they did differently. Was it luck? We’ll let you to make that decision.
Having said that, let’s take lessons from some of the biggest brands in history, to learn how they built a brand empire which outlived their founders.
Below are some of the brands that have outlived their founders and continue to thrive after 100 years. They have succeeded because they have created a consistent brand message, from their nostalgic past, which has resonated with many generations. This reflects their capability to be agile, relevant and authentic.
- Royal Mail Group Ltd, est. 1516
- Guinness, est. 1759
- Cadbury, est.1824
- Coca-Cola, est.1892
- Nikon, est. 1917
- Boeing, est. 1916
Let’s explore Gillette and Fiat’s history and highlight where they succeeded and what we can learn from each brand.
In 1901, the American businessman King C. Gillette (died in 1932) invented the first safety razor, which transformed the way men and women shaved. By 1905, more than 90,000 Americans owned a Gillette razor.
The Italian automotive brandwas founded in 1899 by Giovanni Agnelli in Italy (died in 1945). By 1910, Fiat was the largest automotive company in Italy. They managed to sell over 3 million Fiat 500s to millions of Italians and Europeans customers between 1957 to 1975. Before World War I, Fiat began to push their boundaries by entering new sectors such as: electricity, public transportation lines, railways and the steel industry to open new opportunities. During the World War I and II, they decided to venture into manufacturing military equipment.
So how did Gillette and Fiat sustain its success and outlive their founders? Let's dive in and take a look.
The 4 secrets that helped build a brand legacy
These brands evolved by rethinking and reimagining their products to meet the needs of the emerging customer segment.
Gillette’s innovative razors stood out because of their thin, affordable, strong, and disposable blades. The founder was ahead of his time and became recognised for his innovative products and was the first to create: women's razor, retractable and spooled continuous band, twin bladed razor, women’s disposable razor and many more inventions.
Fiat was a powerful force in global car production because they employed engineers that strived for creativity and innovation. In 2010, a great example of them thinking outside of the box, is when they encouraged their consumers to help design their next concept car. They did this by gathering customer input through social media channels, which helped them create everything from the car design to their marketing campaigns. This approach was a success, which ultimately increased their brand awareness and sales growth.
Both these brands developed a consistent and effective business growth strategy, which helped retain and engage new and existing customers throughout the years.
Gillette invented the Razor-and-Blades business strategy, which helped them generate a continuous revenue stream (now being mimicked and disrupted by Harry’s and the Dollar Shave Club!). This was achieved by getting consumers to purchase a base unit (a razor handle) separately at a low price, and offered the additional components, such as disposable high-quality razor blades, at a higher price range. The success of this model was later adopted by many industries, which proved that once again the founder was a forward-thinking visionary.
One of the strategy models for the Fiat 500 was getting customers involved in their new product development. Their customer outreach strategy focused on listening and being attentive towards their customers needs and requirements. By using this approach, Fiat were able to release successful products that met the expectations of their customers. A great example of this is, when they provided finance and tailor made design options for the Fiat 500 when they re-launched in 2007. This strategy appealed to their target customers and proved to be successful as they sold 2.5 million units that year.
Both brands understood the importance of expanding their business into new markets and maximising their opportunities. They fulfilled this successfully by developing localised business strategies, which required them to adapt their product offerings to meet the needs of their new customer target.
Gillette’s success continued to evolve throughout the years, and their values and mission remained intact. In the process of them expanding into new markets, they were acquired by Procter & Gamble (P&G) in a stock deal in 2005. The acquisition created synergy, as both brands shared similar brand values and culture. This merger helped Gillette expand their product offering to not just men but women too; as their attitudes towards grooming shifted, which Gillette capitalised on by adapting their products to meet these needs.
After the acquisition, Alan George Lafley, the former CEO of P&G quoted the following: “Gillette and P&G have similar cultures and complementary core strengths in branding, innovation, scale and go-to-market capabilities, making it a terrific fit”.
Fiat created the biggest car market in the world (adding SUVs and trucks to its portfolio) by merging with Chrysler Corporation in 2014. After the acquisition, Fiat was rebranded as Fiat Chrysler Automobiles (FCA) in 2014. By 2015, consumer demand in the european market changed as a result of fuel prices increasing. This forced Fiat to remodel their Fiat 500 engine to release low vehicle emissions and fuel consumption.
Gillette declares on their website that their “...legacy of precision began with one man, King C. Gillette. His vision has inspired more than 100 years of innovation to bring you the best shave in the world. And we’re not done yet.” This proves that they plan to continue developing high quality products that align with the brand vision for many more years to come. To also keep themselves relevant in the changing market, they will continue to endorse Athletes (since 1910) to help promote their products and raise greater awareness.
Fiat built their brand heritage by pushing boundaries and not following traditional industry standards. They achieve this from employing ‘non-traditional’ engineers, to getting their customers involved in design process of their new product offerings. As a result, the brand positioned themselves as disruptors in the market, and paved way to their mission of “designing cars to build the future, building cars to design the future.” By ingraining the heritage of the brand to drive all future initiatives, they can stay competitive and grow their customer loyalty.
To bring things into perspective, did these legacy brands exhaust themselves in order to survive in the changing economy, and how was that different from any other startup? Was it luck or did the founder’s resilience and determination pave the way for the brand’s future? In either case, one thing that's obvious is that both legacy brands pushed their boundaries and adapted, in order to enter into unfamiliar territories. However, they never deviated from their heritage and that's what built their foundation.