Love what you do (and the people will pay)

Al Ries and Jack Trout have warned us all for decades about the dangers of brand extensions, but that hasn’t stopped or even seemingly slowed down this particular genre of folly, has it? Why it still happens, I’ll leave to people smarter than myself, though if I had to guess, I’d posit that driven by the at-times suicidal pursuit of growth that is now an unquestioned fundamental of late-stage capitalism.

Whatever the cause, it’s hard not to take a little bit of smug satisfaction when you see the theory become practice in the real world.

To wit, I bring you the real-life example of Barnes & Noble, a company that seemed on the verge of collapse during the 2010s, yet somehow came out stronger during and after the pandemic.

Ted Gioia has the full story of the Barnes & Noble turnaround, replete with a misguided pivot to digital, food service in the stores, and pay-to-play schemes with publishers that brought in revenue but absolutely watered down the in-store experience.

At the core of it all is something so stupidly simple and obvious that it seems like it can’t be real or right or that there must be more to the story: Barnes & Noble put a book-lover in charge:

In the case of Barnes & Noble, the new boss was named James Daunt. And he had already turned around Waterstones, a struggling book retailing chain in Britain.

Back when he was 26, Daunt had started out running a single bookstore in London—and it was a beautiful store. He had to borrow the money to do it, but he wanted a store that was a showplace for books. And he succeeded despite breaking all the rules.

For a start, he refused to discount his books, despite intense price competition in the market. If you asked him why, he had a simple answer: “I don’t think books are overpriced.”

Daunt’s first bookstore was a beautiful showplace for books

After taking over Waterstones, he did something similar. He stopped all the “buy-two-books-and-get-one-free” promotions. He had a simple explanation for this too: When you give something away for free, it devalues it.

But the most amazing thing Daunt did at Waterstones was this: He refused to take any promotional money from publishers.

This seemed stark raving mad. But Daunt had a reason. Publishers give you promotional money in exchange for purchase commitments and prominent placement—but once you take the cash, you’ve made your deal with the devil. You now must put stacks of the promoted books in the most visible parts of the store, and sell them like they’re the holy script of some new cure-all creed.

Those promoted books are the first things you see when you walk by the window. They welcome you when you step inside the front door. They wink at you again next to the checkout counter.

Leaked emails show ridiculous deals. Publishers give discounts and thousands of dollars in marketing support, but the store must buy a boatload of copies—even if the book sucks and demand is weak—and push them as aggressively as possible.

Publishers do this in order to force-feed a book on to the bestseller list, using the brute force of marketing money to drive sales. If you flog that bad boy ruthlessly enough, it might compensate for the inferiority of the book itself. Booksellers, for their part, sweep up the promo cash, and maybe even get a discount that allows them to under-price Amazon.

Everybody wins. Except maybe the reader.

Daunt refused to play this game. He wanted to put the best books in the window. He wanted to display the most exciting books by the front door. Even more amazing, he let the people working in the stores make these decisions.

This is James Daunt’s super power: He loves books.

There’s a pseudo-paradox at play here. Doing the simple, obvious thing at the enterprise level is so, so difficult.

We have this example. We have, most famously, Steve Jobs’ maniacal pursuit of tech that the average person could use - with aesthetically beautiful, elegantly simple design at its core - and yet these feel like the exceptions to the rule. They are remarkable because, despite the success this approach breeds, it still happens so rarely at organizations of this kind of scale.

It takes a certain kind of courage to do what Daunt has done or what Jobs did during his second stint at Apple. You have to rid yourself of short-term thinking and not buckle if and when things don’t go that great in the short-term.

But it’s not as simple as being brave. You have to be a true believer too. True belief is what will get people behind you, whether that’s customers or the oft-forgotten staff - you know, the people who make a difference at the experience level on day-to-day, location-by-location basis. Abandoning short-term thinking is great, but it only resets your timescales. True belief, on the other hand, gives you something else: a sort-of moral code around which to organize. It tells you what to be uncompromising about and makes it far easier to decide what not to do from moment to moment. It’s a priceless thing, and it’s what the most enduring brands have figured out that the rest have not.