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The Mexican standoff, as epitomised by the finale of ‘The Good, the Bad and the Ugly’, is a game theory paradox which is widely regarded as unsolveable. In business terms, Mexican stand-off can be applied to a competitive tender where three bidders have just two rounds, in which one is eliminated in the first, in which to make their case. More familiarly, the semi-final of ‘The Weakest Link’ generally features a similar standoff, where, by playing non-altruistically, players who are not the best player can maximise their chances.

The situation is as follows. Three gunmen stand in a wide, flat area. Their guns are (in the classic Mexican standoff, but, we shall explore, not in the film version) each filled with six bullets. One is the fastest draw, another is the slowest draw, and by common agreement, the third is somewhere in between. Assuming that if two shoot at each other, the fastest will kill the other before he gets a shot off, and, assuming that it takes more time for the fastest to fire a second shot than it did for the slowest to fire a single shot, what are the optimal strategies for each shooter, and is there a guaranteed winner if all play rationally? Further, are there other strategies — for example, playing irrationally — which will benefit a player whose chances are otherwise poor?

Working from the first shot, it is impossible to solve the paradox. If the fastest fires, whichever person he shoots will die, and the other, provided he shoots the fastest, will live. But this gives both other players merely a fifty-percent chance of survival, with no confidence as to which player the fastest will choose to kill.

The key to the puzzle is to look at the second round. The result of the first round could be that only one player is left alive — for example, if the fastest shoots the second fastest and the slowest shoots the fastest — or it could be that two players are left alive — for example, if both the fastest and the slowest both shoot the middle player.

Looked at from the perspective of the slowest player, the second round is always a loss, because whoever else is left alive, the slowest player then loses. Therefore, the slowest player, if acting rationally, must take whatever course of action is necessary to ensure that there is only one round. But there is only one possible choice for this to be the case, and in which the slowest survives. That combination is when the fastest shoots the second fastest, thereby killing him before he gets off a shot, and the slowest shoots the fastest. In this arrangement, the choice of the second fastest is irrelevant. If the fastest shoots the slowest, then the slowest is dead anyway, and if the fastest and the second fastest shoot each other, the result is that the fastest and slowest go through to the second round, resulting in a certain loss for the slowest.

Therefore, a slowest player acting rationally must shoot the fastest player in the first round. The fastest may choose to shoot him, or may choose to shoot the second fastest, but the slowest player cannot influence this decision, and therefore must accept the notional 50% chance of survival, as against 0% in any other combination.

However, if the fastest player is able to reason this, then he knows that the slowest player will shoot him. Therefore, acting rationally, he must shoot the slowest player.

The second player can make his own decision without having to follow this reasoning. Simply, if he shoots the fastest player, then he faces the slowest in the second round. If he shoots the slowest player, he faces the fastest in the second round, which he will certainly lose. Therefore, the second player must shoot the fastest player, hoping that the fastest will shoot the slowest. As it happens — whether the second player knows this or not — the fastest must do this if he is acting rationally.

The result of this is that the second player always wins if the players are acting rationally, and if there are no other factors. The fastest player cannot ‘trick’ this, by, for example, acting irrationally and shooting the second player, since he is still shot by the slowest player acting rationally, and the slowest player never gains anything by deliberately acting irrationally (that is to say, by varying his game), since all other combinations inevitably lead to his death. The middle player has nothing to gain by acting irrationally — he is the winner if all players act rationally, and loses in any combination if the fastest chooses, irrationally, to shoot him, or if the slowest chooses, irrationally, to shoot him, since that then leaves him facing the fastest player in the second round.

Clearly this is not a good game for the fastest player to be entering. He would be better to try to configure some kind of two stage one on one knockout contest, which he will be certain to win in both rounds.

In the film ‘The Good, the Bad and the Ugly’, the character Blondie (aka, the man with no name) is the fastest player, and is the one who proposes the game. In an extraordinarily tense five minutes on screen, the fighters eye each other up, until the second fastest, Angel Eyes (‘the bad’) draws and, rationally, shoots Blondie. However, instead of shooting Tuco (‘the ugly’ — the slowest player), Blondie shoots Angel Eyes. It’s not clear whether Tuco would have acted rationally by shooting Blondie at this point, or would have remembered that Angel Eyes (‘the bad’) is not to be trusted, shooting him, because, in the event, it turns out that Blondie removed Tuco’s bullets the night before, thereby reducing the game to a one-on-one, which Angel Eyes should (acting rationally) not have accepted if he knew the real state of affairs.

However, there are other possible actions which the fastest player can take. In the Weakest Link version of the standoff, all three players get to vote together, with full knowledge of their strengths up to that point (if they have been paying attention), but the strongest player gets to tie-break. In this version, players vote off the weakest link. Acting altruistically, both the strongest and middle players will vote off ‘the weakest link’, who is the third player. But, if the players play rationally, the middle player will vote off the strongest, in the hope that the weakest player will also vote that way, giving a clear 2:1 majority with no tie-break, and leaving him to face the weakest rather than the strongest in the final round. The weakest player must vote for either of the other two. If he can count on the middle player voting rationally rather than altruistically, he will vote against the strongest player, as this will put him into the final, whereas if everyone votes altruistically, then he has lost anyway. There is a slight combination here, in that if the weakest player votes altruistically, and the middle player votes rationally, then the result is a three way tie-break, and the strongest player may be sufficiently displeased that he votes off the middle player rather than the weakest player. But, if the strongest really is the strongest (which is not as clear in the game as in the gunfight), then facing the strongest in the final will result in a loss, and the famous ‘you leave with nothing’, for the middle player which ever way he votes.

In both these games, counter-intuitively, the strongest player inevitably loses if the players play rationally. In the Weakest Link version of the game, the strongest player does not have the opportunity to remove the weakest-player’s bullets. However, in both versions, the strongest player can attempt to disguise himself as a player of a different strength, as can the other two.

In the gunfighting version of the game, the result is then as follows. If all players play rationally, based on the information available to them, then if the strongest player is able to pretend he is the second strongest, he wins, because the weakest and second strongest shoot each other, and he shoots the second strongest. In fact, he can shoot either, because he will still win in the second round. If disguising himself as second strongest is too difficult, he can disguise himself as the weakest — for example, by turning up with his hand in a bandage. In this case, the apparently second strongest shoots the real second strongest, who is shooting the true strongest disguised as the weakest, who is shooting him back. The apparent second strongest’s bullets only strike the apparent strongest after the real strongest’s bullets have already killed him. The strongest player then faces the weakest player in the second round, and wins.

The second strongest player gains nothing by disguising himself, if the other two are undisguised, because he wins anyway.

If the weakest disguises himself as the strongest, he loses, because the real strongest and the second strongest both shoot him. However, if he is able to talk up his position a little, to the extent that he now appears to be the second strongest, then the strongest and real second strongest will shoot each other, and he will shoot the real strongest, thereby winning the game, as there will be no more rounds.

If the players behave entirely irrationally, that is to say, if they have no accurate picture of who is the strongest, then the result is statistical rather than logical. Using the letters S, M, W for Strong, Middle and Weak, and > for a shot from left to right, and < for a shot from right to left, the combinations are as follows:
1) S>M, M>W, W>S = W wins, as there is no second round, and the bullets of S have killed M before he gets a shot off
2) S>M, M>W, W>M= S wins, as M kills W, leaving him to face S in the second round
3) S>M, M>S, W>S = W wins, as this is the same result as case 1
4) S>M, M>S, W>M= S wins, this results is a second round where S will defeat W
5) S>W, M>W, W>S= S wins on the second round
6) S>W, M>W, W>M=S wins on the second round
7) S>W, M>S, W>S=M wins, as in the ideal case where all act rationally
S>W, M>S, W>M=M wins, since W is dead before he fires
In the non-rational case, therefore, S wins 50% of the time, M wins 25% of the time, and W wins, surprisingly, 25% of the time.

Although S is clearly the most likely to benefit from this arrangement, it is the least advantageous to him except for the fully rational version with no disguise, where he inevitably loses.

If he can organise the game differently, into a knockout-type competition, then he will win each round against either opponent.
If he is able to disguise himself, then he wins, provided that the others do not disguise themselves.
In a fully random version, he wins 50% of the time.
In the fully rational version, he always loses, as does the weakest player.

An alternative scenario — which is to some extent what appears to be happening at the end of the Good, the Bad and the Ugly — is collusion between the strongest and weakest, who are aware that, playing fully rationally, they will both lose. However, the price of this, for the weakest player, must be that there is to be no second round, as he will inevitably lose this.

The Mexican Standoff, in this version, differs from rock-paper-scissors because, although the players can vary their strategies, they cannot vary the order of precedence of their skills.

Everyone knows about the 4 Ps of marketing (or 7 Ps if you’re a service, or even more for some things), but do you know about the five Ds of Branding? We could be cute and call them the 5 Dimensions of Branding. But they aren’t dimensions, and that would simply weaken what we are trying to say.

In a certain sense, branding is the very top of the marketing food chain. A corporate branding programme can cost anything from £50,000 for an NHS Foundation Trust, where there is almost no leeway for name or graphical treatment, to several £ million for a branding exercise for a major international product. I once met the guy who came up with the Orange brand name. I think the cost was £3 million, though I may have misremembered. That was more than a decade ago. His process was fascinating, and it wasn’t hard to see why it cost so much. He was obviously used to having to defend the figure, though: he pointed out that since Orange had come onto the market, BT had changed their mobile phone brand three times, and would probably change it another three times. And he was right. Interestingly, the meeting where I ran into him was about rebranding Coventry. I seem to remember that the tender eventually went against his company. Which may explain why, ten years later, Coventry is still not a brand to be conjured with.

There are tens of thousands of brands in the world around us. Most of us would be pushed to name twenty, though if we were given enough categories, most of could probably name several hundred. More to the point, though, in all but a very few categories, most of us would be pushed to name more than three. Name three brands of car? Easy. Jaguar, Rover, Ford, Kia, Opel, Audi. The list goes on. Name three brands of sugar? Erm… Tate and Lyle… any others? Three brands of motor oil? Duckhams, Castrol… any more? Three brands of vacuum cleaner? Hoover, Dyson… erm? Actually, if you drive up the M6 you will see hundreds of brands plastered on the sides of white vans, trucks and tankers. But most of them will be ones you don’t recognise, even if you are actually quite interested in those services. Some of them may be purely local brands. But a large proportion of them are simply brands that do not work very well.

I followed a van today which had the name “Vantage” emblazoned on the side, with a sort of double circle sign in the top right hand corner. Even after looking carefully at the unusual roof-rack on the top I was none the wiser about which product it was selling. Was this Vantage Highchairs, or Vantage Electronics, or Vantage Satellite Receivers, or Vantage Technologies of Sheffield, or Vantage Land, or Vantage Estate Agents, or even Vantage Spit Roasters? Who can say? The fact is, I might very well be in need right now of the product that that van was carrying, but as I have no idea what it was, and the logo was entirely anonymous, they gained no business from the £1,000 it probably cost to paint the van with those logos.

Most people, when they talk about branding, feel it has something to do with a new logo, or perhaps a new name. A true branding programme may very well result in the development of a new logo, or indeed a new name. But it does not necessarily result in the development of either.

The vast majority of brands most of us bump into are Small and Medium enterprises (SMEs), perhaps with names like PB Electricals, or Stechford Roofers, or Procter and Smith Removals, which, if unremarkable, have the advantage of telling you instantly what they do. More ambitious SMEs, however, quickly err into names like Vantage, Synergy, or Ideal, which say nothing about the product and nothing credible about the company. Furniture companies seem to prefer grandiose titles. Manufacturers of leather sofas are the worst culprits. We have seen many unconnected companies called things like Leather Village, Leatherland, World of Leather, or even, in Belgium, Univers de Cuir. The mind boggles slightly at an entire universe made out of leather.

Ultimately, a brand is a distillation of a distinctive promise to the end customer. All of the SME brands I have just listed fail in this regard. The first three, PB Electricals, Stechford Roofers and Procter and Smith Removals set out the general area of their activities, but they do not distil any particular promise. Vantage, Synergy and Ideal are neither distinctive, nor distillations, nor a promise of any kind. The various geographical entities of leather equally fail to make any particular promise.

Saint Paul famously wrote that “I become all things to all men…”. This is probably the right approach for a missionary (I speak from some experience), but it is exactly the wrong approach for a brand. And, in fact, the brand that Paul was selling, Christianity, was exactly non-negotiable, and Paul’s complete flexibility in his own behaviour was, at least in part, so as not to undermine the distinctiveness of that brand. SMEs which choose names like Vantage, Synergy or Ideal generally do so because they want to keep their options open, rather like Universal Import/Export, the cover name for MI6 in the James Bond novels. But keeping options open is exactly what a brand should not do.

Therefore, the first D of branding is Decision.

Decision

For a brand to be successful, there must first be decision about what it actually is, and who it is for. Wolff Olins suggests that a brand can be based around a product, or an environment, or a communication, or a set of behaviours, or, often, one of these supported by one or more of the others. Ultimately, the brand must reflect and portray the decisive features that make that product, or environment, or communication, or behaviours what they are. Any attempt to keep the options open, perhaps to sell into more than one market, or at more than one market position, or to try to brand two or more disparate things in the same way, is doomed to failure.

Distillation

Secondly, a brand is a distillation. Advertisers used to talk about Unique Selling Points (actually, they still do, although the more advanced ones are getting sniffier about this). The notion of a USP doesn’t necessarily work for all products, but the idea behind it, that you have to get to the nub of what you are really saying, is sound. Remember though, that a brand is a distillation of a promise, not a distillation of the product, environment, communication or behaviour itself. Many SMEs struggle with distilling the promise because they are so in love with the product they have created that they want to showcase all its benefits. I once spent a year trying to brand a new kind of friction material for car brakes. The German and Spanish engineers who had developed it kept on telling me more and more features (less polluting, lasted three times longer, very little fade as compared to other brakes, less dust, cleaner dust, etc). Whenever I tried to distil the promise, they explained to me first that this was only a small part of what this material did, and also that I was generalising too much. The lower fade was only on the vehicles they had tested… it would be entirely false to claim that it applied generally, until they had tested all the possible vehicles. After thirteen months I left the company, and I still haven’t heard whether they eventually came up with a name for it. Your product may indeed be all things to all people, but your brand promise can be exactly one thing, to exactly one market segment. If you want to market it to a different audience, introduce some variation and market it under a different brand!

Differentiation

To compete in the market place, the brand promise must differentiate itself from competitors. In the 22 Immutable Laws of Branding (which is a darned good book, despite the rather over-selling title), Al Ries suggests that if you are the second to market, you should pick as your brand colour the opposite of the first to market’s. Differentiation is about differentiating yourself in the mind of your target buyer. If your target buyer is middle-class men over the age of fifty in Britain, and your product is exquisitely bound and superbly translated tales from Viking Iceland, the name Saga Books would not be a winner — not because it fails to distinguish you from other kinds of books, but because Saga Holidays (and previously Saga Radio, now Smooth FM) is one of the biggest brands in that market place. Note that this is exactly the opposite differentiation strategy from the one mandated on you by UK Intellectual Property’s register of trademarks, which stipulates that you cannot register a trade mark in a product sector where that trademark already exists. Clearly you would be foolish to choose a brand name which was similar to an existing brand for a similar product that sold outside your target market — aside from the trademark issues — because the brand value of that brand would be working against you, giving your customer the impression that you were really aiming at a different market. Remember that the brand is a distinctive promise. Your product may be identical to that of your main competitor. For example, if you are selling regular salt, you are unlikely to persuade customers on the basis of product quality, product features, or cost. But you can still make a brand promise — for example, “Salt of the Earth”, “Sustainable Sea Salt”, “Fairtrade Salt”, “Yorkshire Salt”, etc, which makes a promise about where the salt has come from, or how it has been obtained. You could even use pure showmanship (Olins’s ‘communication’ brand vector) and call it “Old Fashioned Salt”.

Discipline

The fourth D is Discipline. There is no effective branding without brand discipline. If you bring “Fairtrade Salt” to market, and the brand is successful, you have to exert great brand discipline to make sure that you continue to source your salt by fairtrade means. A whiff of exploitative practices, and your fairtrade credentials disappear. Equally, if you are marketing ‘Old Fashioned Salt’, then you need to conform all of your marketing to the old fashioned image. It goes without saying that logos must be used consistently, strictly adhered to and strictly defended (more often from well-meaning sales people who want to lengthen or compress the logo to fit on a PowerPoint slide than from competitors). However, if your biggest customer suddenly decides that they are modernising all their shops and no longer wish to stock products with old fashioned labels, then you have to strongly resist the urge to modernise the product to protect your short term sales. Rather, you should go back to the drawing board and perhaps offer to supply “Techno-Salt — scientifically balanced for osmotic benefit”. Just make sure you don’t deliver it in the Old Fashioned Salt van.

There are only a very limited number of branding strategies out there — Corporate brands, such as the NHS or IBM, allow no variation in graphical treatment or use of the name. Their sub-brands are subtitles to the overall brand, nothing more. Endorsed brands, such as Wrigley’s Spearmint Gum, Wrigley’s Juicy Fruits, etc, allow for a wider range of treatments. Separate brands, such as Techno-Salt and Old Fashioned Salt, depend on their separation to be successful. Once you have settled on a branding strategy, you have to stick to it with enormous discipline. An ill-disciplined brand is like an ill-rehearsed band: it falls to pieces in performance.

Delivery
Finally, your brand is exactly as strong as its delivery. Do you deliver what your brand promises? If not, your brand collapses. Contrariwise, every time you deliver on your promise, your brand equity increases. Consider the growth in brand equity of Microsoft. In the early 1980s, Microsoft was the very junior partner of IBM in the hardware driven world of the desktop Personal Computer. Initially all the brand equity belonged to IBM. It was only when Columbia Data Products cloned the IBM BIOS that the market was flooded with cheaper PCs. However, the testing stone of every PC clone was the question of whether it would run MS-DOS — Microsoft’s Disk Operating System. Every time a PC-clone started up, there was a whirring, and eventually a message telling you that MS-DOS was successfully running. That message was the mark of a working computer. When Microsoft took Windows from a rather flakey graphical task-switcher (Desqview was much better) to a proper environment, it made sure that the Microsoft logo was even more prominent than it had been on the MS-DOS start-up. Microsoft has attracted masses of criticism from all kinds of people, and is hated by many. But it has probably the highest brand-equity of any brand in the world. As much as people may curse their computers, and curse Windows, the appearance of the Microsoft logo is the sign that all is well: Microsoft delivers again.

Thus, we have the five Ds of Branding. Or BranDing, if you want a connection. Decision, Distillation, Distinctiveness, Discipline and Delivery. Provided that there really is a market for your product, a brand with these characteristics will exponentially strengthen your product offering. A brand which fails on one of these may succeed, providing the other brands in the market are weak, but it will greater investment for less impact.

More and more people with significant commercial skills are setting up small businesses. This is to some extent a result of the boom in business-oriented internet services, such as affordable payment systems (PayPal, NoChex, etc — see here for a listing), and to some extent a result of the health boom where retirees can look forward to ten or even twenty years of active life. Relatively cheap access to wide markets and low start-up costs make a small business more attractive to the risk-averse — which includes many former senior executives in large companies — and reduces the requirement to turn a tidy profit. The traditional aspiration was for a one-man venture to grow into something larger. In the current climate, many ‘micro-businesses’ are not one man, but half-man or 1/10th man, with an aspiration to grow profit rather than volume of trade.

One area in which neither the personal computer nor internet services has had much to offer, however, is that of the business logo. It’s true that anyone can buy Adobe Illustrator or Corel Draw and have a go, or surf the net for budget alternatives, but a hard-headed business person is unlikely to want to spend so much on what is (for them) a one-trick pony, and probably shrewdly recognises that there is a lot more to logo design than simply owning the relevant software.

To the rescue — perhaps — then, comes an application priced to sell which makes just one claim: the creation of that elusive logo. The Logo Creator, now in version 5 for both Mac and Windows, claims: “Create incredible logo designs that look like a Photoshop guru spent hours laboring over! It’s like having your own logo design studio… without the studio! With The Logo Maker – you’ll get a portfolio full of logos that you can modify and customize yourself… for far less than what a designer will charge.”

So is this the answer to this perplexing pre-business problem, or does it follow the pattern of many things which seem too good to be true?
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Speculation was rife at the beginning of March that Nikon was about to release the D3 flagship digital Single Lens Reflex (SLR) camera, with a rumoured ‘Fullframe’ or possibly ’1.1x’ sensor format. This would put the company head-to-head with main competitor Canon in a highly visible sector of the premium market, but would represent a change of course from the organisation’s investment in DX, or APS-C format sensors and equipment. This case study examines the pros and cons.
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Corporate blogging is the newest weapon in the reputation arsenal. Spider and back-track sites such as Technorati ensure that everyone you reference will check your blog — at least the first time. But blogging is a weapon that can point in both directions. Some CEOs have embraced it, while others have introduced strict disciplinary policies against it. If you decide to go down the blogging route, what are the factors which distinguish you in the blogosphere from teenagers, disgruntled employees, and poorly informed citizen journalists?

There are a number of reasons why you, (or your CEO, if that isn’t you), might want to turn your hand to corporate blogging. First, it gives you a new avenue for free publicity on the web. Blogs are mined for information more rigorously than almost any other form of web-expression. Second, it lets you speak ‘straight from the horse’s mouth’, whenever you feel like it, without the constraints of corporate newsletter schedules or the risk of journalists misusing your press release for other purposes. Perhaps most importantly, it gives you the chance to build an almost intimate relationship with a large, interested audience, who cannot but thank you if you give them insights into an otherwise closed world.
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