Risk and Reward in Licensing

By Michelle Alfandari

“Great companies don’t offer us something to buy. Great Companies offer us something to buy into.” Simon Sinek, Start with Why. 

I love that quote and it applies equally to great brands that have to convey a real and genuine reason for being. 

I recently had the great pleasure of sitting down with 2 veterans of brand licensing and we marveled over the changes in the “licensing” industry.  The good ole’ days always seem better in hindsight but in fact we had a lot of fun back then as we reminisced about establishing a new industry 25 to 35 years ago.  We took intangible assets, trademarks and brands and leveraged them to new businesses that generated awareness, incremental revenue, stakeholder value, opened new channels of distribution and geographies.  We did it with vision and passion, we took risks and we convinced brand owners to take risks with their valuable intellectual property and retailers to give them shelf space.  What we did was unprecedented, there was no road map; and many of those early forays are established licensed brands today living seamlessly alongside their core businesses. 

Fast forward to today and things have changed. Licensing is now an established model for growing businesses and value from IP and yet some very sound ideas and concepts fall by the wayside because of risk aversion.  Risk aversion started before 2008 but it sure became entrenched after that.  There are exceptions with some brilliant brand extensions that got started during the economic downturn but there are so many more that could have been contenders if only given a chance. “If the skeptics didn’t rule”.  Better Homes and Gardens™ may have had a healthy dose of skepticism about ramping up their real estate license at one of the lowest points of the lowest time in real estate.  But they chose instead to believe that their brand could “live’ in real estate. Launching a real estate license in 2008 and expanding it in 2010 may have seemed, well, insane at the time, but vision and a healthy dose of longer term thinking won the day.  The license agreement between Realogy and Meredith Corporation (Better Homes and Gardens™ is a registered trademark of Meredith) is a 50 year term, with renewal options for another 50 years years.  Talk about commitment!  Today the Better Homes and Gardens Real Estate franchise network consists of approximately 8300 agents, more than 250 offices in 26 states and Canada.

As Seth Godin wrote in proving the skeptics wrong (http://sethgodin.typepad.com/seths_blog/2013/07/proving-the-skeptics-wrong.html): “I used to have a list, and I kept it in my head, the list of people who rejected, who were skeptical, who stood in the way. What I discovered was that this wasn’t the point of the work, and my goal wasn’t actually to prove these folks wrong, it was only to do the work that was worth doing. So long ago I stopped keeping track. It’s not about the skeptics. It’s about the people who care about, support and enable. Instead of working so hard to prove the skeptics wrong, it makes a lot more sense to delight the true believers. They deserve it, after all, and they’re the ones that are going to spread the word for you.”

Today, brands need to provide a reason to buy that is more than great function, design, flavor, price or quality. Brands that give something to buy into might just be the game changer that brings the energy, ‘fun’ and rewards of risk back to retail; and have a great chance of resonating and delighting believers who just might be your customers.

I leave you with a twitter posting from Gijs van Wulfen twitter/blog: You Innovate Only if Doing Nothing is a Bigger Risk Quote:  Not all CEO’s are fond of innovation. A lot of them in reality wait until not innovating is not an option anymore. Although this is so human, it is also very frustrating when you as an innovative employee wants to move your company forward. I like to quote the CEO of BMW AG, the German luxury car producer, Dr.-Ing. Norbert Reithofer. When asked why BMW started the risky E-car project with the BMWi-3 and i-8 he responded very honest: “Because doing nothing was even a bigger risk” [Autoweek 41-2013].

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