Beanstalk at 30 Years: Some Things We Have Learned
By Michael Stone & Allison Ames
Beanstalk is 30 years old this year. Time certainly flies when you’re building great brands and working with talented people. Over those years we have learned a lot about leadership, being entrepreneurs and, of course, licensing. We often told new employees, especially in the early stages of their careers, that we could teach them 80% of what we knew in a year but the remaining 20% takes a career to learn. Below are 10 (plus a bonus 11th) learnings that fall within the 20%.
1. Culture Matters. Establishing a strong culture is much more than free pizza on Fridays. A corporate culture is something that needs to be nurtured every day, particularly during these turbulent times. It starts at the top but must cascade down throughout the organization. In the earlier years of Beanstalk, we knew how to work really hard and were confident that our hard work would bear fruit. We had lots of success with early clients such as The Coca-Cola Company, The Stanley Works and Harley-Davidson. We didn’t pay much attention to the culture of our organization and that lack of attention caused some internal dysfunction. Over a decade after our founding, we set out to build a strong culture at Beanstalk and set the agency on a new course. It took time and focus as well as the support of other key senior executives. We began holding quarterly, all-employee meetings to ensure that all of our employees across several offices were informed about what was going on at the agency, including being transparent about our financial results. A monthly newsletter, BeanTalk, shared agency news. We instituted a “give back” program (more on that later). We defined and re-defined over the years the values for which Beanstalk stands. The anacronym for those values today is C.H.O.I.C.E. which stands for Commitment, Humility, One Team, Innovation, Community and Empowerment. We are never complacent about our culture. Our success is in no small measure attributable to our strong corporate culture. And it was that culture that has helped us get through the pandemic.
2. People first, Services second and Profits third. Put the right people in the right jobs, engage and take a personal interest in them and deliver on your service promise. The profits will come. It’s that simple.
3. Licensors and Licensees are not adversaries. Licensing is a dynamic process with lots of moving parts. Licensors are engaged in licensing to build brand equity, communicate a marketing message, retain loyal consumers and recruit new ones and, of course, generate revenue. Licensees want to embrace the power of a famous brand, they want to sell products, satisfy their retailers, and, of course, make money. Sometimes licensors and licensees have different objectives. Sure, each wants to satisfy the other, but generally not by compromising their specific goals. This is a perfect set up for conflict. And it’s easy for the parties to fall into a habit of considering each other adversaries. That’s a recipe for mistakes, anxiety and failed relationships. Each needs to understand and support the goals of the other and recognize that there is common ground - - both parties want well-designed, quality products sold at the right price to the right consumers and they both want the licensed products to be successful. Licensors need to understand that licensees know more about their product categories than the licensor. And licensees need to accept that licensors know more than the licensee about where their brand has permission to go and how a single licensee fits into a much larger program. Conflicts can be resolved through consistent and open communication and understanding, not bullying. As an agency, we make certain that the parties remain aligned.
4. Represent the client with passion and purpose. We have always brought passion and commitment to our licensing clients. It has always been a point of differentiation for Beanstalk that each client respects and appreciates. It’s something that we consciously teach every Beanstalker. Sure, we want our licensees to succeed, but never at the expense of our clients’ goals. Sometimes that requires us to take difficult positions. Sometimes we are compelled to walk away from substantial revenue opportunities. We can give clients the best of our advice, but they make the decisions and it’s our job to implement those decisions, with zeal, whether we agree with them or not. We have always prioritized client service at Beanstalk. That’s one of the many reasons that 11 of our current clients have been with the agency for over 10 years.
5. You can’t go wrong by doing right. Early in our history, we determined to share some of our success with populations in need by donating not only money but our time to select organizations. And we encouraged our employees to do the same. Over 20 years ago, we established the Beanstalk Hands On program which offers employees the opportunity to take paid time off to devote to a charitable activity. In addition, Beanstalk focuses on several local charities in cities where we have offices that enable us to offer opportunities throughout the year for employees to get involved, such as the New York Common Pantry, Year Up New York and Camillus House in Miami. Giving back speaks to the soul of Beanstalk.
6. What keeps you up at night? As we mentioned earlier, licensing has a lot of moving parts. There are a myriad of opportunities, challenges and disappointments, almost every day. Sometimes we get bogged down in paperwork and operational details. We need to respond to endless phone calls and emails. The big issues get put off as we get mired in other demands on our time. We learned to ask, “What’s keeping me up at night?” In all likelihood, it’s the big opportunity or challenge that begs for attention. Don’t get distracted when you show up for work. Get to the important stuff. Answering that question will keep you grounded on what really needs to be accomplished. For example, one of the things that has kept us up many nights was figuring out how to address climate change and sustainability at our company and in our clients’ licensing programs. We wanted to be ahead of the curve on this important issue. And by focusing on this and other issues we have accomplished a great deal. And, by the way, as for problems, well, many of the problems that are keeping you up at night won’t even be remembered in a year. That tells you something.
7. Always have a Plan B. Harvard Business School Professor Nancy Koehn teaches about leadership and uses a Harvard Business Review case study that she co-wrote about the famous British explorer of the early 1900’s, Ernest Shackleton. His expedition to reach the South Pole failed, but the story of how he got his entire crew back to safety when their ship, the Endurance, first froze in the ice and then sank when the ice thawed, 100 miles short of the South Pole, is one of heroism and insight. His story teaches us about leadership within an organization. Shackleton’s Plan A, to reach the South Pole, sank with his ship. He quickly devised a Plan B and under extreme conditions, miraculously, managed to get all his men safely home. Be ready to turn in a new direction. Always be thinking about a Plan B.
8. Licensing is a marketing and communications tool. Little did we know that licensing would evolve into an effective and accepted marketing discipline and the role that we would play over the years in that evolution. Today, we both frequently write, lecture and talk about licensing as a marketing/communications tool, a tool that has accelerated in its effectiveness over the past decade (and Michael wrote a book, “The Power of Licensing: Harnessing Brand Equity”). To survive today, brands must keep working at delivering their message to consumers. Licensed products, services and experiences are an effective way to tell a brand’s story, communicate its message, connect with consumers, strengthen brand meaning and burnish its reputation. It is one of the most authentic ways to ‘advertise’ the power and affinity of a brand. Consumers who are satisfied with their Mr. Clean broom, for instance, might become interested in its other cleaning products and even switch from their current liquid cleaner to Mr. Clean. That’s a big win for P&G. Licensed products reinforce brand values, build awareness and brand meaning, increase consumer touchpoints, open new distribution channels and give consumers the opportunity to express their affiliation with a brand, whether it be Black & Decker or the New York Yankees. Licensing has come a long way in 30 years.
9. Don’t chase the money. While brands make money through licensing, it will often be a small percentage of their top line. Chasing a ringing cash register can lead to mistakes - - the product might be wrong, the quality inconsistent or brand perceptions confused. Remember Colgate frozen entrees, Life Savers soda, Cosmopolitan yogurts, Coors Rocky Mountain spring water, Frito-Lay Lemonade or Ben Gay aspirin? Some of these ideas were supported by research and all are in big categories with significant sales opportunities and royalty revenue potential. Each supposed brand extension failed, and we are certain generated a brand disconnect with consumers. There are more recent examples of brands (we will protect their names) that pursued licensing in sizable product categories, blinded by substantial financial guarantees, only to face failure, contract disputes and, sometimes, litigation. Money is the side dish. Marketing and strategic fit is the entrée.
10. Stick to your knitting. Licensing has allowed us to learn about product and service categories, sales and distribution, consumers, retail, differing markets around the world, creative execution, marketing and all of the services that a licensing agency can provide clients without veering too far off the licensing path. Beanstalk represents licensors and licensees, offers royalty auditing, royalty management, legal services, creative services, consulting, and more. But just because we excel in all these licensing services doesn’t mean that we have the expertise to offer other marketing services. Over the course of our respective careers, we have ventured into sponsorships, premiums and promotions, product placement and once even published books based on a client’s characters. All these attempts to spread our wings into areas having little to nothing to do with licensing failed. Perhaps that just speaks to our own limitations, but we learned over the years to stick to our knitting, as Tom Peters wrote in his book, In Search of Excellence. Beanstalk has succeeded largely by focusing on the business we know and building our organization to the best that it can be.
11. The back office is the backbone of a licensing program. From our very early days we have always believed that the contract process moves faster and is more effective with our in-house participation and lead. We hired in-house lawyers to focus on contracts. We also strongly believe that our clients deserve comprehensive royalty collection, administration, forecasting and analysis. There are a lot of learnings in royalty reports and in discussions with the finance professionals at clients and licensees. Additionally, we have a business to manage and we want it to be on sound financial footing and tracking according to a strong financial plan. We have to understand the foundation of our clients’ licensing programs better than they do to drive performance and course corrections. Today, Beanstalk employs a seven-person legal team; a 14-person finance, accounting and royalty management team; and a five-person royalty auditing team. Our back office functions are part of our service offerings to clients and they are so comprehensive and sophisticated that we get hired by clients for back office service only. We can’t succeed and can’t provide the services that our clients do and should expect without our back office.
Those are eleven of the many things that we have learned about leadership, entrepreneurialism and trademark licensing during my 30-year (Michael) and my 25-year (Allison) licensing journey at Beanstalk. We wonder what new things we’ll be learning in the next 30 years. Stay tuned!