How Important Is a Name in Building Company Success?
When beginning a company, how important is this seemingly small factor in determining success?
I recently watched “The Founder”, a movie about the rise of McDonalds. Having worked at a McDonalds throughout my formative teenage years, I was intrigued to learn how the big chain came to fruition. What I came away with was: Ray Croc was a dick (entrepreneur who expanded McDonald’s to global recognition), the McDonalds brothers were stupid/naive and when it comes to success, business is business.
At the end of the film, Croc and one of the McDonald brothers find themselves in the men’s room, where a discussion of Croc’s motives come up. McDonald wanted to know why Croc hadn’t just replicated their idea in a restaurant of his own versus stealing theirs. Dumfounded as to how, even now, after the sale had been completed McDonald still didn’t know why Croc had done what he’d done, Croc explained it to McDonald. It wasn’t the system, or the location, or even the idea he’d been after, the name was what made it special. It, as in the name “McDonald’s” was the reason for the restaurant’s success because it sounded wholesome and “American”. The name had cachet and it wasn’t something he could just replicate.
Walking away from this movie, I couldn’t get this scene out of my head. This idea of a name and all the other factors needed for success in business, more specifically restaurant ownership got me thinking: why do some chains or restaurants succeed while others fail? How much do unique factors, such as the name, in this case “McDonalds” play into their overall success?
Going even further, I became curious about a small restaurant chain here in Vancouver as I recently read a news release of their newest restaurant opening in the financial district. The small company, Tacofino, will now possess 4 restaurants here in Vancouver, not to forget the one they have in Victoria and the original Food truck they started with in Tofino. Since launching their brand over 10 years ago, they’ve gone from small food truck to budding franchise enterprise with a strong following and very little reason to see them slowing down. A Calgary, Edmonton or even Toronto location seems only imminent. Kudos to them.
But then I wonder, much like how McDonalds came to be by the gutsy work of one man’s vision who saw the genius in two brothers concept and name, has the rise of Tacofino been driven largely by their great name?
Famed Israeli/American psycholgist Daniel Kahneman wrote a book a few years back titled “Thinking Fast and Slow” where in it he discusses how the mind works, more specifically how the mind operates using two distinct systems. In his book he refers to them as System 1 and System 2. One system is automatic and effortless (System 1) while the other requires more active and deliberate thought (System 2).
As I try to distill Kahneman’s two systems back to McDonalds, Croc asserted that the name had cachet, it sounded wholesome and “American”, when in reality what he was saying was that the name resonated easily and conveyed all that he wanted or will want the brand of McDonalds to tell: he was dealing with a System 1 action. As Kahneman says in his book:
“A general “law of least effort” applies to cognitive as well as physical exertion. The law asserts that if there are several ways of achieving the same goal, people will eventually gravitate to the least demanding course of action. In the economy of action, effort is a cost, and the acquisition of skill is driven by the balance of benefits and costs. Laziness is built deep into our nature.”
Therefore, when making decisions, an easy to understand simple answer is usually the best.
Yet, Croc’s decision to steal their name versus using his own or coming up with another showcased how he understood immediately the value in having a name that marketed well. As Maria Konnikova illustrates in her New Yorker column “Why Your Name Matters” she states that there’s a term for this type of behaviour which psychologists call ‘implicit egotism’: “we are generally drawn to the things and people that most resemble us. Because we value and identify with our own names, and initials, the logic goes, we prefer things that have something in common with them.” If this is true, then Croc was correct to assume that customers would gravitate towards a more common and wholesome sounding name like McDonald’s versus his own Slavic sounding Croc. Same goes for Tacofino and their use of a name that, again, we recognize.
Another factor here I’d like to examine is how we process and allocate words. As children we learn new words each day, up to 10,000 by the age of 8, and our associations with those words will undoubtedly affect how we perceive them into adulthood. Take for instance the word dog. As a kid this is just a word to you, but let’s say your neighbour has a big, fluffy cute golden retriever whom you love. Your comprehension of dog will now be of a positive nature. Had your neighbour owned a mean dog, the opposite would be true. Thus, with McDonald’s, Croc saw that the name sounded American and that it was open to interpretation, it was a new word for many. Therefore, he could shape how we perceived it. Yet, with Tacofino, for most of us, we already have associations with the word Taco. Either from fast food chains like TacoBell or TacoTime, from trips to Mexico or from the hard shell Old El Paso tacos that your mom would make you on random tuesday nights. Guilty here. But, for most of us, whether positive or negative, we understand the word Taco. Starbucks created a word and then created their brand behind it. Tacofino used an already established word and added to it. It gave them a leg up on their competition.
But in doing this, I’m curious: do you think the owners of Tacofino knew that by adding Taco to their name they’d be giving themselves an advantage right out the gate? I believe they did and here’s why.
Author and keynote Ted Talk speaker Simon Sinek likes to call this action the “Why” principle or “The Golden Circle.” His posits to ask three fundamental questions:
- Why — This is the core belief of the business. It’s why the business exists.
- How — This is how the business fulfills that core belief.
- What — This is what the company does to fulfill that core belief.
As Sinek explains “…most companies do their marketing backwards. They start with their “what” and then move to “how” they do it. Most of these companies neglect to even mention why they do what they do. More alarmingly, many of them don’t even know why they do what they do!”
Companies who have found a way to convey why they do what they do most often than not find a way to attract those customers who share their beliefs. My initial takeway as a frequent customer of Tacofino was that their core belief was to showcase their love of Tofino and surfing as it’s definitely apparent the minute you walk into any one of their restauants.
This was their why and they knew it. Have a look. This is from their website.
“From the back of a surf shop parking lot in Tofino, British Columbia emerged a concept — to infuse the experiences of our travels with our West Coast roots, and bring them to life in our beachside surf town … and beyond.”
So you see, I believe that yes, the owners of Tacofino knew what they do as well as how they were going to fulfill their why; but in my opinion, they’re name certainly had a lot to do in achieving their goals. It’s plainly obvious and right there for you to see.
Most company names pass us without much of a thought. Yet, when presented with a good one, like a McDonalds or Tacofino, it’s easy to wonder how much success came from that name. I digress to say that it’s probably impossible to fully pin down how much a good name really helps. But, in the end, it really doesn’t matter, as a restaurant is and will always be more than it’s name. Everything inside matters just as much, because if the product, service and hospitality are lacking, any great name will not cut it. The owners of Tacofino have grown their company because they’ve created a great product that resonates with their target market — they’re great name is just icing on the cake and I’m glad I understand that.
Ok now I’m hungry, time to grab a burrito.