Madison Square Garden in July 1928 was buzzing with motor car enthusiasts, press and curious spectators, as a major industry event was unfolding. The site amplified the fanfare surrounding the introduction of a new automobile brand. On cue, curtains open from a side entrance to the arena, and a dazzling, new Plymouth Model Q rolled into the exhibition hall, driven by famed aviator Amelia Earhart.
The Plymouth automobile brand was developed to meet a growing market segment. Joe Frazer, a thought leader in the automobile industry, and his boss, Walter P. Chrysler, understood what customers wanted and how their company could deliver. At that time, the Chrysler automobile brand offered customers advanced, well-engineered cars, positioned as upscale and higher-priced than entry-level competitors.
In the mid-1920s, Ford and Chevrolet dominated the low-priced auto market. Walter Chrysler, Frazer and the Chrysler team believed by offering a product with more standard features than Ford or Chevy — things like four-wheel hydraulic brakes and full-pressure engine lubrication — would speak to customer needs and grow market share.
On July 7, 1928, Chrysler introduced the Plymouth brand at Madison Square Garden in an effort to earn relevance in the growing economy vehicle market.
Plymouth’s market entrance was at just the right time. While the Great Depression contributed to the failure of many automobile companies, Plymouth sales grew. By 1931, the Plymouth brand was No. 3 in sales of all automobiles. Plymouth was off to a strong start, earning relevance through innovation at an economy price point.
Earning and sustaining relevance
In a business context, “relevance” refers to the pertinence, meaningfulness or importance customers ascribe to a company’s products or services.
Relevance has a finite shelf life because it is always defined by stakeholders. Customers’ preferences, expectations, interests and options are in perpetual motion. Existing competitors raise the bar. New competitors shift the paradigm by disrupting the market as normal is redefined.
Recognizing the essential elements of earning and sustaining relevance empowers leaders to navigate business dynamics and thrive as conditions evolve.
Losing relevance is unintentional. Certainly, Frazer, Chrysler and their colleagues had no desire to oversee the deleterious effect of diminishing relevance on the Plymouth brand. Yet, that is exactly what happened. On Nov. 3, 1999, a CNN Money article noted that DaimlerChrysler would be eliminating the weakened Plymouth brand name, a move that had been expected by industry experts.
The article quoted Britt Beemer, chairman of America’s Research Group, as saying, “To a great extent, the brand has become a non-brand.” Relevance lost!
The Plymouth story is not an isolated case. All businesses operate in a dynamic environment where “normal” is continually redefined. Stakeholders’ expectations, preferences and alternatives are in perpetual motion. Many factors contribute to a business’s success and longevity; perhaps none more than sustaining relevance with stakeholders. Leaders distracted from relevance indicators create great risk for their organizations.
It is said that management is about finding answers, while leadership is about asking questions. Perhaps the most important question for leaders today is: All things considered, how do we earn and sustain relevance with our stakeholders?
Earning relevance starts with organizational vision. One of the greatest responsibilities of leadership is driving continual evolution of the organization toward a well-defined future state. Without clear vision, activities and processes, leaders and businesses will inevitably drift.
When organizations begin with a clear picture of their contribution to the world and why it matters, they establish a destination. Everything else follows vision: priorities, initiatives, processes, activities and results.
With a clear future-state picture, leaders can look to relevance indicators to see where their company stands. Every business is different, but most have a line of sight into common leading and lagging indicators of relevance with key stakeholders.
Examples of leading indicators suggesting relevance may be in jeopardy include:
- Observing changes in employee or customer satisfaction trends or engagement measurements
- Increased complaints
- Unfavorable online and social media traffic
- Pricing deterioration
Lagging indicators of diminishing relevance include:
- Employee and customer attrition
- Decline in repeat customers
- Fewer new customers
- Decreasing average sales
- Margin deterioration
The revenue-relevance correlation is strong.
Twenty years from now, some of the most recognized companies in the world today will not exist. As with the unfortunate demise of Chrysler’s Plymouth automobile brand, many name brands will become footnotes in history.
To corroborate this statement, consider businesses that have disappeared over the past 20 years: Circuit City, Toys R Us, Blockbuster and Palm, for starters. Some series of factors unfolded, company leaders missed or misread the environment, and they consequently failed to address diminishing relevance.
In my book “Leading from Zero: Seven Essential Elements of Earning Relevance,” I address the need for balancing the resolve for relevance with delivering results.
Businesses that practice principles like “Seeing their Organization as Others Do,” “Unceasingly Redefining Normal” and “Adaptive Disruption” position themselves for earning and sustaining relevance. These companies are rewarded with valuable repeat customers, deeper relationships, referrals, positive word-of-mouth and strong recurring revenue. Those companies that overlook relevance with their stakeholders see revenue deterioration, margin compression, decline and eventual demise.
Dave Coffaro provides strategic management consultation and executive coaching to for-profit and nonprofit businesses. As principal of the Strategic Advisory Consulting Group, he works with financial services businesses and nonprofits to achieve accelerating growth, more favorable economics, or both. In addition, he is co-founder of Atticus and a director with Members Trust Company. Coffaro speaks and writes about strategic leadership, leading change, organization transformation and innovation. His latest book, “Leading from Zero: Seven Essential Elements to Earning Relevance” is available through Amazon.