Sam Hill and Glenn Rifkin, authors of Radical Marketers, testify to the ability of brands like Harley-Davidson, Iams, Snap-on Tools and the Grateful Dead to generate powerful customer loyalty. “Radical marketers,” they say, “tend to succeed by finding a consumer base they understand and sticking with it for the long term.”

That principle was borne out in my research for When Growth Stalls. Brands that were the most successful over the long term were the most consistent in pursuing and wooing a well-defined customer base. Building awareness, credibility and affection take a great deal of time and focus, and they can neither be acquired overnight nor taken for granted.

It’s a lesson that companies like GM and Chrysler long ago forgot. And one that all of us–no matter our company or industry–would do well to remember.

Have you given up on innovation? MIT’s Michael Schrage says that can be fatal to any company, no matter the industry.

Schrage offers an interesting counterpoint to a famous statement by Columbia Business School’s Bruce Greenwald, who said, “In the long run, everything is a toaster.” Schrage disagrees, citing the evolution of two-sided toasting (1919), toaster ovens (1950s) and digital toasters (1990s), among other advances.

And Schrage says the opportunity for innovation can be especially ripe in industries that appear to be commoditized. “Price wars for products don’t necessarily mean that innovation has reached its limit;” he says, “but the low prices could be a signal that more advances are needed.”

Even in the mundane world of toasters, the playing field is continually changing. How are you using innovation to change the dynamics of your industry?

Alright, we’ve got to wake up.

GM’s latest plan is for the federal government to take a majority stake in the company, in exchange for $11.6 billion in new “loans”. That’s in addition to the $15.4 billion the company has already skimmed from taxpayers. That’s over $25 billion government dollars being misappropriated to prop up a doomed private entity. Doesn’t that alarm anyone?

This is nuts.

The government has no business being in the car business, no experience running a major multinational corporation, and lacks even the proper incentives to operate profitably. GM is going to fail one way or another, and the only question is how many of our kids’ dollars they’re going to take with them. It may be fair to say that the government, GM management and the UAW are trying to prevent people from getting hurt, but we’re past that now–people are going to get hurt. The company has been mismanaged for decades, and the executive suite, the UAW and the government are all complicit. GM shareholders assumed this risk when they invested in the company, and their investment has now gone belly up. Too bad.

There will be a flurry of analysis over the next few days about this deal, and the pointy-headed pundits will evaluate it down to the last detail. But the end result is obvious to anyone with common sense: it will flop, and it will take billions and billions of taxpayer dollars with it. The government and the UAW as majority partners in running a giant private enterprise? Does anybody really believe this has a chance of working? Let the market work, let the investors lose their stakes, let the company try to reorganize in bankruptcy court, and let’s get on with it.

In When Growth Stalls I talk about the problems of a loss of focus, a loss of nerve, and a loss of management consensus, all issues with which GM has struggled. But this one tops them all–loss of sanity.

1970s: GTO. Firebird. TransAm. Drool-inducing muscle cars. Power. Styling. Cool. The appeal isn’t for everybody, but it’s powerful for some.

2000s: Um…er…Aztek? Trans Sport? Sunfire? Vibe? It’s not clear to whom Pontiac is trying to appeal. Oh, that’s right–everyone. Which means no one.

And another great brand hits the dustbin of history.

“Someone who can make progress in an ambiguous environment.”

–Ries Robinson, InLight Solutions

“The relentless pursuit of opportunity without regard to resources currently controlled.”

–Howard Stevenson, Harvard Business School

When we conducted our first wave of research into stalled growth among former Inc. 500 companies, we were intrigued to discover how many of them had at one time been pioneers in their industry, which (by definition) gave them 100 percent market share. By the time we fielded our study, however, the average market share of these companies was only 16 percent.

That’s not surprising. As any industry matures, increasing competition will carve it up into smaller and more tightly-focused market segments. Still, it’s no fun to climb to the top only to watch your market share decline year after year (just ask GM).

One of the more notable companies currently struggling with this phenomenon is Nokia, the nearly 150-year-old Finnish corporation that became the global mobile phone leader in 1998. Nokia is one of the most powerful brands in the world and has sold well over one billion mobile devices. That’s a lot of phones.

Alas, it’s hard to stay big. In the past few years, as the economy sputtered and competitors stalked, Nokia’s share of the mobile device market began slipping. It was forced to fight off a bevy of low-cost competitors at the volume-driven bottom of the market and the Blackberry and iPhone phenomena at the margin-driven top. In its recent quarterly earnings release, Nokia reported that its mobile device volume was down 19 percent from last year, while the industry was down only 14 percent. That cost Nokia two points of market share, from 39 percent to 37 percent.

The company does have a lot of cash and new products in the pipeline, but it’s tough to fight a multi-front war. As the industry continues to struggle (Nokia predicts a 10 percent industry volume decline in 2009), the company’s smaller competitors are likely to get even more aggressive, whether out of opportunism or desperation.

Nokia’s strategy, according to internal documents, is built to leverage “scale, brand and service.” It will need all three operating at peak performance to keep from sliding further back as the year plays out.

From the Wall Street Journal:

“Bean counters qualify their audit opinion of a company when they have some doubt it can remain a ‘going concern.’ Based on SEC filings up to March 26, research firm Audit Analytics reckons the proportion of companies with such accounts for 2008 could hit 23.4%…”

Hmmm. I think I’ll go back to work now.

EBay purchased Internet phone service Skype in 2005 for over $2.5 billion in cash and stock. Two years later, as the promised synergy between online auction services and web-based telephone calls didn’t materialize as planned, EBay took a $1.4 billion charge on the unit. Now Skype is for sale, with EBay’s still-new CEO calling it a poor fit with the rest of the company.

“Behind PayPal, Skype may be the most valuable franchise on the Internet today,” says John Donahoe. “But if there is not synergy there, it does not belong in EBay.” He says that the move “will give Skype the focus and resources required to continue its growth and effectively compete.”

Given the industry’s legitimate questions about Skype’s business model, this may or may not be true (despite its strong recent results). But Donahoe appears to be making the move (and taking the financial hit) for the right reasons. He says, “the acquisition of Skype was an intelligent risk to take at the time. I supported it then. It turned out just to be a great stand alone business.”

Now Donahoe is convinced that EBay should return its focus back to its roots in e-commerce and online payments. “I am taking our company today and positioning it for the future,” he says. “Great companies go through this. Great companies evolve their culture. Great companies evolve their portfolios.”

He’s right about that. But great companies also lose their focus, too. It’s nice to see EBay returning to its core competency of connecting buyers and sellers. Now all it has to do is connect with a buyer (or buyers, in the event of an IPO) for Skype.

The news broke late yesterday that Oracle pulled a fast one on IBM by acquiring Sun Microsystems in a $7.38 billion deal. Larry Ellison, Oracle’s CEO, says Sun’s Java programming is “the single most important software asset we have ever acquired.” He may be right, and this deal may go down as Ellison’s master stroke.

On the other hand, it could be a big flop. Java accounts for a small percentage of Sun’s revenue, the bulk of which comes from hardware in which Oracle has precious little experience. Oh, and Sun’s hardware business is currently unprofitable.

Let’s not forget that companies like Sun, Oracle and IBM are run by larger-than-life CEOs who are continually trying to out-maneuver one another for competitive advantage (and bragging rights). It’s possible that Oracle’s interest in Sun was piqued by IBMs overtures, and only then did they find a way to justify doing the deal. Very few decisions in business are completely rational–especially decisions of this magnitude and urgency, around which the adrenaline can’t help but flow.

I’m no computer industry analyst, so I will leave the professional prognosticators to analyze how a purchase that will take a big bite out of Oracle’s margins may be overcome by giving them a leg up in software development. What I will say is this: when companies of this size and importance merge (particularly in industries as competitive as hardware and software) in an economy this unstable, issues surrounding consensus, focus and consistency are sure to arise. As I detail in When Growth Stalls, these are the unexpected internal dynamics that often take companies down.

I wouldn’t be surprised if a year or two from now we were reflecting on the acquisition that should have worked, but didn’t. It’s all too common when growth stalls.