Apple has again been rated as the world's top brand this week, but a leading social researcher warns the omnipresent technology giant is losing touch with its Generation Y heartland.
Michael McQueen tracks the changing tastes of Gen-Y and believes the inventor of genre-defining devices such as the iPhone, iPad and iPod could be largely irrelevant to people under 30 within five years.
The Sydney-based researcher has written four books on social trends with the most recent, Winning The Battle For Relevance, based on a survey of more than 500 companies.
He created a "relevance curve" for the book to describe a company's importance to its core market and believes Apple is "past the turning point".
"They're not as hot as they were two years ago. The next 12 months will be absolutely critical for them, whether they can release another game-changing product like they did with the iPhone and the iPad. It's been a long time between drinks for them," McQueen says.
The BrandZ ranking of global brands released this week ranked Apple at number one ahead of Google, IBM, McDonald's and Coca-Cola, a result that BrandZ says is based partly on global value but also on consumer sentiment.
However, McQueen points to Forbes magazine's annual ranking of innovative companies, which last year relegated Apple from 5th to 26th. He says the rising profile of portable device competitors such as Samsung is creating "a subtle shift in what's now cool".
"The iPhone is not the badge of cool that it was even 12 months ago," McQueen says.
"The key would be to recalibrate - who they are, why they exist, what business are they in."
McQueen's first book, The New Rules of Engagement, was based on interviews with 80,000 high school students conducted over three years. He has since worked with corporate clients, teachers and parents in an effort to "decode the younger generation" as well as gaining an understanding of how companies work.
He says any company - even one as large as Apple - can lose touch with its customers in the space of just five years, pointing to the likes of Blackberry and Sony as multi-nationals that squandered market-leading positions.
Blackberry held a massive 42.6 per cent of its target market in the US in January 2010, which has slumped this month to just 5.2 per cent.
"Their two big failures were that they failed to connect to the lifestyle market, so they were so corporate and so business, that they got stuck in that mode," McQueen says.
"They'd got so big, it was like 'we could never fall'. One of the key principles is this thing called the intoxication of success. They're so big for so long, they become close-minded, arrogant, complacent, even a sense of invincibility creeps in. Kodak is another in the same boat.
"You look at brands like Lego, they're the poster children for re-inventing themselves constantly. They almost went broke in the early 90s, they were in serious trouble, now they're in everything. It's a brilliant company.
"The minute you look around at your team and everyone is of similar age, of similar background, you're in trouble. At Daewoo, up until they collapsed, up to 70 per cent of their management team went to the same high school.
"So you've got this culture that forms that attracts people who are like what the culture already is. Anyone who comes in with a different mindset is ejected, like a white blood cell.
"Organisations often can't see themselves and you look from the outside and say 'you guys are so stuck in the way you do things, nothing has changed in the last three years, and you all look the same', which is a big telltale sign."
McQueen says there is no way to accurately predict how many companies may unknowingly have passed their peak and be heading into a period of decline, although it is often staff rather than management who see the first signs.
"Often the managers only look at the skin-layer indicators, like how are we tracking against the budget, what are our KPIs. But on the floor often it's those staff who know because they talk to customers, and customers are saying 'you're overpriced' or 'your systems are outdated', but it's not filtering to to the top," he says.
Companies often measure themselves against key indicators - sales, market share or balance sheets - that McQueen describes as their "audible pulse", but which typically reflect decisions made up to two years prior.
"You can have a really good audible pulse and all your outside indicators look good but your 'silent pulse', which measures how relevant you are and what your momentum is, can be way off. That might not show up for another two or three years," he says.
"Kodak was still a darling of Wall Street for years, almost a decade after they'd lost the battle to digital. People still loved their stock, they were still a wealthy company. So you can be a long way down the track towards being irrelevant and if you're only measuring your audible pulse, which is all the tangible things, you could have no clue."
There's some good news for companies that can identify their impending decline and act to arrest the slide. McQueen says IBM dragged itself back from the brink in the late 1980s and early 1990s with an exhaustive company-wide review, and that Sony is currently doing something similar.
"It's not too late, but it will be hard for them," he says.
- Sydney Morning Herald