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Why ‘brand’ valuation is due for an overhaul

The mystique of brands and what they can do for business has been a subject which has consistently drawn my professional attention and over time evolved into a personal quest spanning two decades. From my early days in market research studying brand equity to rebranding identity and finally ‘brand’ valuation, I have always remained a firm believer in questioning the very conception of ‘brand’ which has been accepted in conventional management approaches. I had always wondered what would it take to bring to get this debate started. I recently reviewed Harvard Business Review’s ‘Why Strong Customer Relationships Trump Powerful Brands’ and it sets the ball rolling. It has been a long time coming and raises deep questions which ought to be debated and acted upon.

Quite simply, the article states that the paradigm of ‘Image Brand’ that has been around for the past 30-40 years which has been disrupted by digital technologies and seamless access to information for customer decision making. That would mean the much quoted AIDA model of moving an unaware consumer through a funnel in a linear fashion by building a powerful set of associations through advertising campaigns is giving away and fast. The article then goes on to demonstrate this value shift with a decade long analysis of how ‘brand’ value is declining and customer value is on the rise. The arguments are genuine and calls into question what do ‘brand’ valuations mean or more fundamentally what does a ‘brand’ itself mean in these extraordinary times?

There can be no doubt that the conception of ‘brand’ as an ImageBrand is most certainly losing its potency and in decline. The problem is that the paradigm of ImageBrand holds sway in our collective understanding. The conventional marketing tools and techniques try to band aid what is essentially an outdated model, a remnant of the industrial design of business which was reductionist at its core. To top it off, all the well known ‘brand’ valuation methodologies work with a premise that ‘brand’ is a separately identifiable asset, one among the many intangibles. In this piece meal of decomposable assets which financial standards require, the ImageBrand/Trademark is becoming poor in both meaning and value creation contribution. In other words, the brand paradigm as we know it to be, will not be the locus of value creation in the near future, even if it serves some accounting valuation purposes. Does this mean this mean the ‘brand’ will not be important? Far from it. However, it does show the meaning we have imputed to ‘brand’ has run its course over the past four decades. We are in the twilight zone of a great transition which calls for a more deeper start point from which ‘brand’ can become useful as a dexterous management tool the next 30-40 years.

Such a next practice of ‘brand’ would mean it overcomes the limitations of Imagebrand. Having seen the limitations of the ImageBrand, I chose to experiment with a concept of a ‘SoulBrand’ where in the idea of a brand undergoes a radical shift from a narcissistic external projection to an introspective reality check for leadership. In this conscience keeping role, the brand becomes the reference point of stakeholder value vis a vis leadership hinge assumptions. It binds all business functions into a whole which is greater than the sum of the parts thus fighting back silos, fragmentation and complexity which is eating away into the vitals of the bluest of blue chips. Such a brand drives coherence across all other intangibles like culture, people, stakeholder relations and innovation. Our work consistently indicates that purpose lies at the core of such an architecture of brand and related intangibles. Without this central orchestration of purpose, soft assets have no axis of unity to integrate with each other, eroding their ability to add value. Most importantly, the brand moves away from a fanciful image projection to a reality check for leadership. As we see with Barclays, FIFA, Nestle, IBM, TESCO and others, the ImageBrand offers little respite when reputation takes a hit and is no better than a post-mortem. What is needed is the therapeutic cold shower of the SoulBrand. It has the ability to lay bare the deeply held assumptions which limit management’s ability to act on stakeholder value and express it in terms of Long-term Value Creation scenarios (Non-linear Upside/Risk). From self -congratulation to self- inquiry. This is the only way trust in brands can be protected in well in advance of emergent risks which inevitably lie within. 

We hope this HBR piece will generate a sustained energetic discussion to move this subtle subject forward from its limited conventional meaning which often leads to misuse and disappointment.  

© M Unni Krishnan, 2015

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Last modified: April 2, 2020