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Review

Innovation: Brand It or Lose It
David Aaker

© 2007 by The Regents of the University of California

Innovation:
BRAND IT OR LOSE IT

David Aaker

nnovation is increasingly at the center of the strategy and the DNA of most firms. The logic is that innovation will lead to growth andprofitability. Growth will come from innovation-driven new products and businesses and profit will follow from innovation-inspired margin increases and cost decreases. Further, as most markets drift toward commodity status with offerings becoming similar, innovation is seen as the way to create differentiation, thereby shielding firms from price erosion. Indicators of the interest in innovation abound.Each year some of the most influential books are focused on topics such as how to innovate, organizational characteristics of innovative firms, creating new business arenas, disrupting the market, anticipating trends, and R&D.1 Further, business publications such as Business Week and Fortune regularly have cover stories on, or related to, innovation. It is hard to find a firm that does not give lipservice to innovation. Nearly every firm will include innovation as one of its cultural values and as one of the pillars of their strategy. Many have innovation as a corporate tagline—HP’s “Invent” to Toshiba’s “Leading Innovation” to Toyota’s “Moving Forward” to Cargill’s “Nourishing Ideas.” GE, for example, placed a new emphasis on innovation in 2001. The flagship program was the internally branded“Imagination Breakthrough” initiative, in which each business is charged to develop three breakthrough proposals with $100 million potential, and which has created some 80 such potential businesses. Externally, GE repositioned its brand around a new tagline “Imagination at Work,” which replaced their classic but confining “We Bring Good Things to Life.” Proctor & Gamble, another firm emphasizingnew innovation initiatives, established in 2000 a goal of sourcing 50% of all innovation outside P&G from

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CALIFORNIA MANAGEMENT REVIEW

VOL. 50, NO. 1

FALL 2007

Innovation: Brand It or Lose It

a global network of innovative sources and bring the resulting ideas into the P&G business units (for example, Swiffer was produced by Unicharm, a competitor in Japan).2 With all thisinterest in innovation, there is little discussion of how innovation should be branded. The subject of branding is virtually never raised in the books and articles on innovation. The focus is on the benefits and even necessity of innovation, how to make it happen, how to overcome organizational barriers, and how to overcome implementation problems. Discussions of branding are absent. However, abrand strategy can be critical to the success of an innovation, particularly in the long-term. There are times when a firm literally needs to brand it or lose it. Without a successful branding strategy, an innovation can be short-lived—diffusing into a confused marketplace with its impact dissipated— or become another forgotten internal initiative. In such cases, branding can make all the difference.That does not mean that all innovations should be branded. Far from it. There is a real risk of over-branding resulting in confusion and under-resourced brands. Branding, it should be emphasized, does not mean simply putting a name and logo on an innovation. Rather, it means that a brand is part of a coherent strategy, supported by actively managed and adequately funded brand-building programs.Branded innovations can potentially help advance a business in three distinctive ways. ▪ They can create or improve the offering, making it more differentiated and more attractive. In this context, the innovation can be represented by a branded or sub-branded product or by a branded feature, ingredient, or service. ▪ They can create a new subcategory to change what customers are buying. The...