Through out my years in market research, brand valuation and leadership consulting, I have often wondered how strong brands (by all the best in class market research tools) often end up in big trouble or in perennial decline. The list post 2008 is a roll call of the once hallowed names including the likes of GM, Kodak, Olympus, Nokia, HP, Toyota, Tesco, Toshiba and now VW. Surely this should get strong brand owners thinking. Research proves that companies have much shorter lifetimes (please refer my column Softly Killing themselves) and it ties in. There are three interrelated areas which need careful consideration from a brand perspective:
- The industrial marketing paradigm of the ‘ImageBrand’ that has long dominated our mind space is unable to cope with the challenges of digitization, transparency and customer evolution. The whole concept of AIDA which leads firms to invest billions of dollars into advertising to strengthen the perceptual halo of the brand is on shaky ground. While brand equity and value of many firms are measured on prestigious lists, they obviously do not measure many significant risks which are prevalent in the business model and expressing fast. Simply look at VW building up their ImageBrand in the US market as the most efficient and green diesel engine and what went on inside the business.
- This leads to a major brand conundrum which I have noted for years. The stronger a brand gets, the riskier it becomes. Yes, I know marketing finance says it should be the other way around! Simply put, the iconic nature of brands has a close connection with management teams who are firmly wrapped up in an Alice like Wonderland syndrome. The strength of the brand becomes rather intoxicating and anything goes. Of course, there is a strong thread of such delusions, in all these crash & burn stories. Astounding to the world that day it breaks in the open, but not for the top teams who were systematically getting bolder and bolder as the stakes grew higher. All quite consciously underwritten on the strength of a great name and reputation. It is a great fall guy and everyone will shed a tear too.
- Such self-destructive tendencies develop when companies become large, complex and disintegrated. In today’s world virtually most front end brand promises made at customer touch points cannot be seamlessly delivered by the back end. Put it another way, marketing departments hire sophisticated agencies to map touch points and segment customer bases, study needs and do very many interesting things. The sad truth is that the promises which are then relayed to a trusting customer base is not fully met and in some cases completely not delivered by the business model. This impacts staff morale and commitment to the brand’s cultural ethos and values over time. The fact is, most brands are devoid of any substantial purpose which immediately makes them vulnerable to short-term forces especially when quarterly numbers are around the corner. That backbone of Purpose alone can hold together its culture, values and innovation preventing distortions and deviations to the delivery of the brand promise through the business model.
Purpose led Brands and Business Models is not merely a nice to have high brow discussion. Instead, the steep uptrend in mortality rates of strong brands makes it obvious that companies need to put in place a Purpose led Business Design as a part of leadership accountability. It will prevent misplaced assumptions, disintegration and entropy from consuming the living vitals of stakeholder trust; the brand.
