Soon Yu - Iconic Advantage: Don’t Chase the New, Innovate the Old

In 1989, Dov Charney had an idea in his university dorm room. It wasnt a big idea. It was simply exporting American-made T-shirts to Canada. He called his company American Apparel. Very soon he found himself making enough money to drop out of university and pursue the business.

Within 10 years hed moved to LA, opened up a manufacturing plant, and shaken up the garment industry by paying his workers twice the going rate. In a few years, American Apparel grew to become the largest T-shirt manufacturer in the US.

Seeing the popularity of his products, he expanded the company from wholesale to retail, eventually opening over 250 outlets around the world.

He grabbed the worlds attention with a controversial advertising strategy. American Apparels ads looked more like spreads from Playboy magazine than traditional fashion adverts. It was often surprising how few products the models were wearing. Sales continued to rise.

However, the companys racy ads began to generate more attention than the products they were advertising. If you mentioned the brand in conversation, people would talk about the sexually explicit imagery rather than the quality of the clothing and its ethical manufacturing.

In an interview with American Public Media radio, Dov Charney even admitted, My biggest weakness is me. I mean, lock me up already. Its obvious. Put me in a cage, Ill be fine. Im my own worst enemy. But what can you do? I was born strange.

His strangeness began to be a significant liability for the business. It generated poisonous rumors and sexual misconduct lawsuits. The brand no longer represented what the market wanted. It had completely lost its relevance.

Imagery that was initially seen as sexually adventurous was now seen as sleazy. The higher price of the garments didnt stack up against the cheaper high-street retailers. And their staunchly hipster aesthetic wasnt attracting new customers.

In 2014 there was a mutiny. The board of directors ousted Dov Charney from his own company. They hoped that returning to the basics would help the company rebuild itself. But it was too little, too late. In October 2015, the company filed for bankruptcy.

At one point in time, the brand appeared to have everything going for it. But it didnt last. And the business hit the dirt in a rather dramatic way.

So what went wrong?

Like many rapidly growing brands, American Apparel relied on market momentum and noisy advertising. An old adage is that advertising is the tax you pay for having an unremarkable product. And no amount of advertising can help you when youre not sufficiently differentiated from a new wave of cut-price fashion retailers.

As far as we can see, American Apparel failed to refresh its product line to remain relevant to its loyal customers. As the fashion website Racked put it: American Apparel are trying to sell an aesthetic that is no longer fresh and exciting.

In short, the company neglected to enhance its Noticing Power to remain distinctive and bolster its Staying Power to remain relevant. Without doing that, it was unable to create any long-term Iconic Advantage .

American Apparel ended up being a fad rather than an iconic brand. Too many businesses fall into that trap. It will be interesting to see if the brands new owners can get the companys mojo back.

If you had to list the icons of swinging 60s London, youd probably include the Mini Cooper somewhere near the top. It was a car that really seemed to capture the spirit of the time. It didnt look like anything else on the road. It was quirky, cool, and refreshing. And its no surprise that it became such a success.

However, as the swinging 60s made way for the sexy 70s, the electronic 80s, and the naughty 90s, the Mini ran out of road.

The brand failed to capitalize on the amazing iconic power of the product that was right under its nose. Over the years, it hadnt really invested in Staying Power to keep the brand relevant and meaningful. By the end of the century, the last car it ever made, the 5,387,862nd, was almost identical to the very first one it made.

The classic Mini

Fortunately, this wasnt the end of the story. BMW was standing by to turn this 20th-century icon into a 21st-century one.