When a household brand name, such as RadioShack, has sustained its business for decades there is a curious crossroads that seems to appear on their horizon. On the one hand is the tried and true direction the company has always taken while on the other hand is something that would be altogether new. The angst in this decision is choosing between what has worked for years or try something that is new and different. Because the problem is so enormous and has such enormous consequences, not to mention these decisions often need to be made quickly, there is a huge pressure on management.

The older the brand, the tougher the decision

Over the years I have observed, and consulted, with a good number of venerable brands that were tearing themselves up because they could not come to a cohesive decision of which way to go. Their technology had changed. The market wasn’t buying their type of widgets anymore. There were new players in their key markets and on their key customers’ doorsteps. Direct sales distribution had always been the primary sales drivers of the brand but their customers were moving to online ordering and didn’t want any direct sales people in their offices. On and on the stories would go with no resolution or decision in sight.

Why does this happen to some companies and not to others? I would argue that it happens to all companies who have been around long enough but that’s not the real problem. The real issue is how well the company has stayed in touch with its customers throughout the years is usually the critical mass to their continuing success. Hard as it is to realize, many companies are simply not up to the task of reinventing themselves preferring to stay with what has always worked and go down with the ship.

Let’s look at Radio Shack. The company has tried just about everything:

  • Kiosks in Target Stores selling cellphones and wireless products
  • Selling cellphones in their stores nationwide
  • Selling wireless products along with wireless plans and mobile phone services in their stores
  • Selling iPhones in their stores despite the low margins Apple imposes

But what’s wrong with this strategy might be that their brand name, RadioShack, and all that it stands for, has not been successful in its stores so why would it be successful in other retailers’ stores? It’s one thing for Apple or Starbucks to place their brand name product on another retailers’ shelves where the power of their image can make a dent, it’s quite another for a lagging brand to think a new venue is going to change their image.

All companies face this same challenge. To keep its brand refreshed in substance, not just image, based upon what their customers need and want. The brands that do this regularly can make any transition that is required without disruption to their business. But if a company has gotten out of lockstep with its customers it will inevitably find itself on the outside looking in.

The issue before RadioShack is what should be their next “big idea.” What should they become? It should be apparent that the shack-ness of RadioShack is not working against retailers like BestBuy. Circuit City found that out the hard way. It is not easy to compete against a brand that knows its customers well and gives them what they want.