Rest in Peace – The Rest is History

by Sabinna on April 30, 2010

As you drive through the Taichung county hinterland, you will see this rising above the rice-fields.

Giant HQ Watertower

War of the Worlds?...

When you get right up to it, this is what it will look like:

Giant Watertower closeup

...No...it marks the place of an important event

A water-tower. Well, yes…and no. Imposing, and–as I understand it these days–no longer used. It also marks the burial site of the failure of an experiment and other odds and ends. Location: Giant HQ.

Back in the late 1980s, Giant was making its first moves towards carbon fiber frames. (How about this for the first carbon fiber bike). The goal was to try to produce a lugged frame that would stay together. These first trials were not successful, so the whole production was buried in a pit and the site covered over. Later came the water-tower.

It does not add much to the conversation to mention that without failure there would be no progress. Giant is–and has been for quite some time–a state-of-the-art producer of carbon frames on an OBM basis, as well as OEM/ODM for other companies, one legacy of this incident and others like it.

With this in mind, let me return to June 2009’s Taiwan Global Brand Forum and George Lin’s (Pacific Cycles) comments on the closely related concepts of “branding” and “innovation”. Fausto Pinarello’s (who spoke first) take on things provided an interesting contrast between an established, highly-prestigious brand–one that has long ‘made it’–and the discussions about what you have to do to get your brand to this position.

In my discussion here, I will focus on the discrepancy between documentation available online and the publications available at the seminar, including the open forum discussion that took place after both speakers had concluded their remarks.

George Lin emphasized that successful branding involves a Blue Ocean strategy, making a distinction between branding as about differentiation and perceived value whereas innovation is about making something really different which gives “authentic value”.

The idea here is that if innovation can be defined as creating a component or complete bicycle that does not just involve a superficial change such as a different color of paint, then this is the basis of your brand. You (radically) differentiate your brand by producing technological, authentic value.

This goes well with current thinking about branding, although it does have its own particular take. I find there is a bit of a contradictory clash between branding as perceived value and a product has having its own authentic value. I take “perceived value” here to mean the value given to a product or brand by its consumers. It’s what they think it is. This accords with the view of many  marketers these days ie. that consumers are now completely in control of the brand.

But the strategy is also saying that you can still control, or at least channel, consumer perception through real technical innovation. The gap between consumers’ perceptions and industry innovation comes to be bridged by traditional market research in which users’ needs are identified and addressed. I think this strategy is half-way between the old marketing world and the new, much more radical, “relinquish control” mode of thinking that many say is here already.

Anyhow, I must say that I think George Lin is on the right track. Brand building does come from careful attention to users’ needs and then applying innovative technologies to address those needs. I cant yet see how the cycling public control brand sentiment in the way that the new world marketers envision. But my thinking is changing, and I think there is more to it than this.

But to return to the seminar, how might Pinarello’s strategy, as one of the mega-brands, fit into this vision? The message I took away from the day’s discussions is that the issue for them is brand maintenance, and perhaps brand extension.

It suggests that if they are to maintain their pre-eminent position, they need to maintain their brand by following a similar process. It would appear to be successful, since for yet another year Pinarello’s top model–the Dogma 60.1 replaces Prince at the top–has been voted Best Race Bike by Bicycle Magazine.

But, again, the issue is complicated. Pacific Cycles’ have progressed from OEM through ODM to OBM (and their overall operations retain elements of each). The focus of George Lin’s Forum contribution was the challenge that Taiwan companies face in progressing from OEM, to ODM/OBM.

Pinarello’s strategy–and I guess this can be said of most of the European mass-produced brands– is actually ODM. The development of their business has been one of OBM to ODM. As Fausto remarked in relation to carbon fiber, the “best technology” is in Taiwan–it’s “number one” (of course he was preaching to the converted). The production of authentic value, then, for established prestigious brands depends on working with OEM/ODM suppliers on one hand whilst remaining ever attentive to the views and needs of their customers on the other.

You can view the watertower with which I began this post as a monument to a creative moment in bicycle design history. For me it looks, in both directions, to the past, but mainly into the future. And the future will have its fair share of dead-end roads. No prob, go back to the junction and just follow another road. Or carve your own, into the wilderness–but that’s not for the faint of heart. I think I’m up to tackling the challenges of working in ODM/OBM new frontier territory.

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