I’ve always had great admiration and respect for IBM as a company and brand. IBM has been a pillar of integrity and innovation; from being one of the first companies to offer health care in 1934 to helping put a man on the moon in 1969, their achievements are awe inspiring. When our company was acquired by IBM, I was immensely excited and I was thrilled at the possibilities that would unfold for me. When I told some of my friends about the change, they were skeptical, even consolatory. They asked me questions like “is IBM still growing?” and “I thought they were just a huge consulting firm that still made servers?” It wasn’t the reaction I expected. I listened to their input and filed it away, as I wanted to experience the changes without any bias or the preconceived notions of other people.

My IBM experience and the catalyst of my investigation…

As we started to become integrated, my excitement was reconfirmed. I was meeting some amazing people doing great things. I was introduced to folks that work on computer chips that can “see” like a human brain and perhaps most impressive was my front row seat for the development of our cognitive capabilities. IBM even held a Cognitive Challenge where diverse groups from around the globe submitted proposals for new industry solutions using Watson analytic services. I jumped at the opportunity to participate and my group came up with a method by which your TV cable or satellite box would instantly suggest programming for you based solely on your Twitter profile.When I told my friends about the work I’m doing with Watson, I was shocked by the response. They said things like “that’s awesome, Watson is a game changer” and “really? Watson is pretty cool.” I was happy that they were excited for me, but it got me thinking, “why the disconnect?” There was one more comment that really opened my eyes, “I’d work for IBM if I could work on Watson.” Suddenly, everyone I was talking to expressed the same sentiment. It was revolutionary. Watson wasn’t “cool” because IBM created it. In fact, it was playing from behind. It turns out that Watson, a sub-brand, is actually changing the perception of the parent brand, IBM. And that’s when I decided to do some research to figure out what was going on.

My research…

After finding articles from the Wall Street Journal (IBM can be cool) and Forbes (how companies launch brands), additional web searching alone highlighted the fact that Watson is “the platform for cognitive business”. But web searching wasn’t telling me the whole story so I decided to turn to my most trusted source, academia. Published in the October 2015 edition of the Journal of Consumer Psychology; Chun, Park, Eisingerich, and MacInnis presented findings on this phenomenon in their article titled “Strategic benefits of low fit brand extensions: When and why?” One of their hypotheses was:“when brand reputation is week, the dual effects of positive brand extension evaluations and positive spillover effects are greatest when a high fit extension has innovative benefits (H3) because high fit strengthens consumers’ trust in the weak brand’s ability to deliver promoted benefits (H4).”To test this, they used a weak reputation brand “Burberry” and a strong reputation brand “Armani”. They then had 289 undergraduate students participate in the study. They were asked about their familiarity with the brand and their perception of the brand’s reputation. Then they read that the parent brand had introduced a new product to the market (either bed sheets of a desk clock). The students were asked to evaluate the extent to which they felt surprised by this brand extension. Next the student read an excerpt detailing product benefits ostensible from the new product section of a parent magazine. Students were asked to indicate how motivated they were to process the information while reading the product description. They then evaluated the brand extension and the parent brand. They then indicated their trust in the parent brand’s ability to deliver the promised extension benefits. Finally, the students assessed the fit between the brand extension and the parent brand and rated the excerpt’s believability. The results were statistically significant and they accepted their hypotheses. “Across three studies, we find converging evidence that brands with weak… reputation should pursue distinct brand growth strategies involving high… fit extensions with innovative benefits.” Basically, when a brand’s reputation is down, creating a high-fit, innovative and novel brand extension will not only be well received on its own, but will raise the perception of the parent brand.

It’s elementary my dear…

Risking the mistake of drawing an over-arching conclusion off of 1 research article and a personally limited data set [my friends’ opinions of IBM and Watson], I’m willing to propose that the reason my friends’ impressions of IBM has improved is due to the high-fit, innovative and novel brand extension that is Watson. Whether intentional or wonderfully accidental, Watson has transformed the opinions of many people [well, my friends anyway] on the brand perception of IBM. One way to leverage this brand sentiment is to work with partner technology and software companies to use our cognitive capabilities and feature it as “Powered by IBM Watson”. Much like the wildly successful “Intel Inside” campaign of the late 90’s. Even divisions within IBM are looking to leverage Watson where they can. My group, Watson Marketing within Watson Customer Engagement, has begun delivering cognitive capabilities in our products that bring new insights and direction to marketers that allows them to interact with customers in ways that were never possible before. By having the only cognitive marketing platform in the industry, the demand from marketers to be able to leverage our technology is tremendous. It’s exciting to watch our clients delight their customers by utilizing the insights that are now available to them.

What’s next?

As the reputation of IBM, the parent brand, is universally perceived as strong again, the study goes on to say that it would actually be better off creating brand extensions that are “low fit” in nature. Because low fit extensions cause people to evaluate the idea closer and already trust that the parent brand can deliver. The low fit extensions must be innovative, and novel, and done well. But the incongruity derived from the low fit may induce surprise and enhance consumers’ motivation to process brand extension information, such that innovative benefits are more deeply appreciated. So IBM will be free to enter all sorts of new markets that didn’t look like a fit at all, and customers will accept this… as long as the parent IBM brand is strong, and the extension is innovative and done well.If you have thoughts or opinions on this, please share! Also, get creative… With a strong IBM parent brand, what new markets should we get into or what new products should we create?