How do you turn around a legendary gun-maker brand in bankruptcy? The revival of Marvel Comics provides an inspiring, useful playbook for any branding comeback story.
Colt Defense, the storied American weapons maker whose innovations include the 1911 pistol and the M16, filed for bankruptcy earlier this week. Meanwhile, on the other side of the world, another iconic manufacturer admitted its days were numbered. HMT mechanical watches, which for decades “were India’s go-to gifts for graduations, weddings and retirements,” is closing soon, reports the Wall Street Journal.
What do these companies have in common, besides their downturn in fortune? They both have strong, recognizable brands giving them a form of cultural currency in their nations of origin. And if either company plans on staging a comeback, then the key will be finding new ways to parlay that currency into a new value proposition for customers.
That, at least, is the chief takeaway you can glean from other iconic brand comebacks–be it Lego, J.Crew, or countless others. The tactics may differ, depending on particular circumstances, but in all cases, the brand and its original ideals remain a rallying point as the company adapts to the future. As Colt and HMT try to figure out what to do next, they’d do well to learn from a turnaround in an industry that couldn’t be more different than guns and watches: comic books.
Marvel’s Killer Assets
When you own the rights to Spider-Man and Captain America, you own some serious intellectual property. Despite these seemingly insuperable assets, Marvel battled bankruptcy in 1996. Its comeback was so successful that Disney acquired Marvel for $4 billion in 2009.
How did it happen? Chris Zook, no stranger to corporate turnarounds as a partner at Bain & Company, believes the Marvel comeback followed a familiar script. “The renewal of Marvel was based not on leaping to new hot markets, or dramatic new technologies, but the reapplication of the strongest assets in the company’s historic core,” he writes in the Harvard Business Review.
In Marvel’s case, those assets were its loyal customer base, its brand, and its collection of roughly 5,000 characters–many of whom were immortal brands in their own right. Those assets were valuable, Zook notes, because they allowed Marvel to deploy “a repeatable formula.” That is, if you own the rights to Spider-Man, you can continually devise new ways to license them: movies, games, more comics, sequels, and spinoffs.
Specifically, Marvel tapped into the latent potential of its assets. Hard as it may be to believe today, from a business standpoint, prior to its bankruptcy, Marvel was focused more on paper and ink than it was on films. The realization that its assets would be worth more in a new environment–movies–was central to the turnaround.
“We found that 90% of strategic comebacks were fueled, in part, by assets in the original core business …that were adapted to a new environment and took on new value that had not been previously recognized,” writes Zook. Other examples of once-latent assets that fueled a turnaround include IBM’s service business and Apple’s software interface differentiation.
How HMT and Colt Can Adapt
Mahendra Bisht, president of the workers’ union at HMT, believes the watchmaker can rise again by finding new ways to monetize its latent assets: precision machines and workers who know how to use them. Instead of making watches, he believes the company can reinvent itself as a manufacturer of weapons and ordnance. He shared with the Wall Street Journal a list of items the plant has already made: bullet inserts, ammunition carriers, pins and brackets for Indian air force jets.
You can find a parallel to HMT in the story of Marlin Steel, which famously reinvented itself about 12 years ago. At the time, it made $800,000 a year selling wire bagel baskets, and was sinking fast because of competition from Chinese factories, who charged less for comparable baskets.
Serendipitously, Marlin Steel received a sales call from an engineer at Boeing who wanted 20 wire baskets to hold airplane parts and move them around the factory. The engineer was willing to pay $24 per basket, while the bagel shops were balking at $6.
It was then that Marlin Steel realized that its ability to make wire baskets was–in some ways–a latent asset. It had far more value for Boeing than it did for bagel makers. Boeing was to Marlin what the movies were to Marvel. If HMT can find its Boeing, it will have taken the first step toward its own revival.
As for Colt, its story resembles Marvel’s in one significant way: its placement in pop culture. In fact, Colt products are woven into American history. Here’s a list of significant Colt moments, courtesy of Paul M. Barrett’s superb feature on Bloomberg:
- William F. “Buffalo Bill” Cody purchased a Colt Peacemaker in 1883.
- George S. Patton Jr. bought a .38 revolver in 1912.
- American officers carried Colt .45 pistols into World War I, World War II, Korea, and Vietnam.
- Colt made M16 rifles that GIs took into Vietnam.
- Colt made M4s that U.S. soldiers took to Iraq and Afghanistan.
- John Wayne, Clint Eastwood, and Bruce Willis used Colts in movies.
- Captain John Miller (played by Tom Hanks in Saving Private Ryan) used a Colt.
That’s the sort of history no johnny-come-lately brand can fake. In addition, Patton’s Colt .45 revolver recently fetched $75,000 in an auction, providing a certain level of fiscal proof: Colt’s brand (intermixed with Patton’s) has value on the open market.
The question is whether Colt can find customers for its brand’s intellectual property, which boasts a distinct mixture of iconography and history. When you imagine content-craving customers who’d potentially license this intellectual property–in the same way moviemakers and toymakers license Marvel characters–you can come up with some interesting names, including Disney, which through its A&E Networks subsidiary, owns The History Channel and The Military History Channel.
Nor is it farfetched to think of a Colt comeback as a weapons maker. For while Colt has struggled, other gunmakers have thrived. “Shares of both Ruger and Smith & Wesson are up roughly 60% since the start of 2015, far outpacing the broader market,” notes Matthew Rocco on Fox Business. Perhaps after Colt emerges from bankruptcy, one of these companies will buy it and find new ways to leverage the brand–and all it has stood for, through the years.