Chapter 14 : brand DRAMA OF LEADERSHIP
In a Japanese internal communications process called Hoshin Planning, the CEO regularly (eg annually) writes to all employees (or team leaders) clarifying corporate strategic intent and issuing the next improvement challenge that the company must implement. Employees (or team leaders) are required to reply in terms of what contributions they will make to this challenge and how performance improvements can best be measured. (NB - a reply such as "none" is OK if employee and CEO agree, but the communications gap needs to be narrowed if their conception of potential actions varies. The Japanese CEO delights in identifying communications gaps as learning opportunities for improving organisational alignment and not as faults of individuals).
The Japanese say that great challenges concentrate the organisation's minds wonderfully. Learning companies need the best of teams and the best of individuals. A culture which gets the best of one but not the other will not serve to lead.
Why not go one better than the Japanese? Do something similar to what they do with core competences, but script it for brands too. That way you could have a customer leading service culture, and a lot of flexibility in focusing learning. An organisation in which everyone is aligned to prioritised leadership goals, and confident enough to keep on asking questions.
If you want this, then it must be promoted by cross-functional leaders at the top of the organisation. Starting with the CEO. But then the Japanese say "leadership is about showing people what they are achieving and what they can achieve". So Charterers say "how can we dramatise brand and corporate leadership as inseparable allies in the art of propagating added value purpose?"
A Declaration of Interdependence for Brand Leadership WE believe that strong brand processes are never managed, always led.
WE believe that meaningful brands are service visions whose purpose is to accelerate the future
WE believe that brands are often a company's only commercial licence to invest in medium-term foresight.
WE believe that brands have rights. Leaders must develop proactive organisational cultures specific to a brand's needs
WE believe that Brand Chartering can keep the brand's accumulation of service knowhow top of mind across the business team.
WE believe that stewardship of corporate reputation must be culturally embedded as the responsibility of one and all.
WE believe that the entirety of a company's brand architecture is appropriately thought of as a megaprocess, ie one which interconnects all of the company's other core business processes.WE believe that future wealth creation resides in strong brand leadership.
We believe that the CEO in every company whose main assets are brands should have a Declaration of Interdependence. He or she should tailor it to the company, and then ensure it is worn in action across the organisation. This Declaration must be ripe for its time and that future horizon which the CEO sees as his/her responsibility to direct. Our Declaration is meant to be ripe just-in-time for the new millennium.
So where do the inspirations of our Declaration come from? And what meanings need to be read between the lines of The Declaration of Interdependence?
Strong brands are never managed, always led
Look at any period of sustained brand growth and you will see that strong leadership was there. View the Brand Benchmarking examples ( ThinkPiece 1) at such vital times as:
·Gillette's reengineering of the marketing process which now propagates its global lifestyle image as "the best a man can get"
·British Airways' renewed service mission to be the world's favourite
·Coca-Cola's drive during the second quarter of the twentieth century to be "within arm's reach of desire" around the globe. As part of this process, its successful advocacy to America's War Office that Coke should be adopted as the GI's mascot for the duration of World War 2.
·Sony's determination to over-rule market research findings that the Walkman did not have a market
·Shiseido's enduring perspective regarding cultivation of "glocal" beauty
Strong leaders gospelise their foresight for the brand, make symbolic leadership gestures and are prepared to involve their business in acts of world statesmanship that go beyond the short-run - and therefore require the sort of total organisational commitment which only the CEO can lead. Consider a symbolic and a statesmanship episode in the life of McDonald's.
|Ray Kroc, founder of McDonald's franchising, demonstrating his vision of cleanliness |
"On his way back to the office from an important lunch in the best place in town, Ray Kroc asked his driver to pass through several McDonald's parking lots. In one parking lot he spots papers caught up in the windscreen of shrubs along the outer fence. He goes to the nearest payphone and calls the office, gets the name of the local manager, and calls the manager to offer to help him pick up the trash in the parking lot. Both Ray Kroc, the owner of the McDonald's chain (in his expensive business suit), and the young manager of the store meet in the parking lot and get on their hands and knees to pick up the paper"
This story is told and retold thousands of times within McDonald's to emphasise the importance of the shared vision of cleanliness. In short your actions in living your vision will motivate your employees to use the vision. Teaching the elephant to dance, James Belasco
|McDonald's - Nature of organisational investment of being an Ambassador to Moscow|
The costs and the time consuming process of meaningful global PR can be immense. Are we getting to the stage where globally branded companies, like nations, may best be served by two sorts of governing bodies - executive managers in charge of business operations and elder statesmen with the status and the time to engage in ambassadorial missions for the company? Consider how The Economist (of 3 February 1990) observed McDonald's Moscow opening.
"True the symbolism is irresistible : the epitome of capitalist consumerism come to the citadel of world communism. But note the extraordinary lengths to which McDonald's has had to go to open its Moscow outlet.
Although the food and drink served by the Moscow restaurant are indistinguishable from that served in McDonald's restaurants from Peoria to Tokyo, the company has had to alter radically the way it does business in order to achieve this feat. Rather than buying from local suppliers, as it does everywhere else, it has been forced to integrate vertically through the local food industry on a heroic scale, importing potato seeds and bull semen and indirectly managing dairy farms, cattle ranches and vegetable plots. It has had to construct the world's largest food processing plant, the size of five soccer pitches, at a cost of $40m. The restaurant itself cost a mere $4.5m.
Worse it has taken McDonald's 14 years of relentless effort to open its first restaurant. In 1976 the company began talks aimed at opening a restaurant at the 1980 Olympic Games in Moscow. That prospect died when western countries boycotted the games after the Soviet Union's invasion of Afghanistan. McDonald's hopes only managed to survive by a fluke; the Moscow McDonald's is being operated not by the American parent but by its Canadian subsidiary. When the deal died in 1980, the Soviet ambassador in Canada was Mr Alexander Yakovlev, a would-be reformer whom Leonid Brezhnev had dispatched into diplomatic exile. Mr Yakovlev told Mr George Cohon, the head of the Canadian operation: "Don't lose heart. At the moment this is ideologically impossible. One day you will be able to do it." Patience was to have its reward when Mr Yakovlev became a sidekick of Mr Mikhail Gorbachev and, for a time, one of the most influential figures in the Soviet Union.Restarted in earnest after Russia's first joint-venture law in 1987, negotiations for this one $50m deal have taken about half of Mr Cohon's time, a huge commitment for a man running a $1 billion-a-year business. If Soviet leaders think that all chief executives can spend this amount of time on a single deal, they will be sorely disappointed."
Meaningful brands are service visions for accelerating the future
Leo Burnett put the essence of service leadership brilliantly. "When you reach for the stars you may not quite get one, but you won't come up with a handful of mud either". Branding offers a unique process for facilitating this. Leaders employ the high visibility of branding to reach for the stars with their company's services in front of all their publics.
Two ramifications of this should not be underestimated by those wanting to exploit the breadth and depth of meanings communicated by strong brand processes:
·All brands are services
·The leader's purpose of investing in communications is to accelerate the future
Brands are services
Even when a brand is manifest by some product of the moment, the consumer's own buying agenda is there to be served. You can reinterpret:
·Shall I buy this product? as ·Will this brand meet my need?
People make purchases to solve problems which they prioritise as instantaneously at the top of their personal agendas
The brander's service purpose here is primarily twofold:
·to guarantee - continuously to do everything in the company's wherewithal to ensure the purchaser will not be disappointed, and will indeed be delighted
·to befriend - to be constantly perceived as serving the human need in the most friendly way by integrating product functions and the human interpretations which are most relevant to the roles people play in purchasing a brand, consuming it, or witnessing consumption of it
If a Brand Charter ensures that everyone who serves a business shares the same top-of-mind purchasing agenda as the brand's most loyal consumers, a valuable job will have been done. As Judy Lannon says : "think of brands as consumers' editors of choice" and you will start to feel what great service responsibilities pass through your reporting desk.
|IKEA's leaders : meet the coach, not the boss|
(Extract from EIU report : The successful corporation of the year 2000)
IKEA's no-frills management seeks to coach, not boss. Talking with Goran Carstedt, president and CEO of IKEA North America, is to experience management by realism. His office is in a sprawling IKEA store in Pennsylvania, so that he can stay close to employees, customers and products of the world's largest retailer of home furnishings. Mr Carstedt greets guests in an open-plan office, and thinks he is failing at his job if he senses employees are nervous when he eats in the IKEA cafeteria or walks around the store.
For all its financial success, Mr Carstedt stresses that IKEA's philosophy remains low cost, high value - with management practising what it preaches in its everyday dealings. "The mission for IKEA founded several decades ago by Ingvar Kamprad is 'to create a better everyday life for the majority of the people' by offering high quality furnishings to the masses.
"Much is made of the fact that at IKEA there are few titles, no executive parking spaces, and business travel is economy-class airfares and $60 per-night hotels. The reason for this is simple : a low cost structure enables us to provide our customers with the best value. We cannot provide good design at good prices if management costs are high. As managers, we must set good examples and are constantly asking ourselves, 'How do we cut costs that do not add value for the customer?'
We at IKEA are radically decentralised. We are less of a hierarchy than an organisation in which authoritative information can enter the system from one of several points. Our Los Angeles store, for example, could give the lead to the entire global system if an initiative originating there was found to have system-wide appeal. Each co-worker is invited to try new solutions. To increase speed, we have replaced instructions from headquarters with general guidelines on how to recognise outstanding opportunities. By substituting a general strategic direction for specific goals, we give local store managers the power and freedom to recognise stepping-stones that lead in desired directions.
IKEA's corporate structure should be looked upon as a reverse hierarchy. Customers stand on the top rung, supported by local stores who serve them. The stores in turn are supported by regional organisations. Finally, at the bottom - and I mean the bottom - is IKEA's headquarters. This includes me.
Managers should first learn to be servants. This is how I see my role in the organisation : helping the employee who has the most contact with customers to do the best job possible.
Like most people, I read what I like to read and I see what I want to see. In terms of management theories, the one I find most true to corporate life is the learning organisation. You can score in the short-term or make some achievement without being one. But I think to be truly successful, the organisation has to learn and adapt to changes in society. I can give you a few examples of how we have acted upon what we have learned about our customers:
·At IKEA, we have learnt that shopping is now an activity families do together, because both parents work and there generally seems to be less time for families to be together these days. So we set out to make the shopping experience something all family members can enjoy : eg supervised child-care and playgrounds, wheelchairs for the elderly, restaurants and cafeterias to relax in.
·Some customers want to do more for themselves so that they can save money. We offer them instructions on setting up their own furniture. But for those customers who want to buy assembled pieces and have them delivered, we provide those services as well. We constantly ask our customers to tell us what they need, how they want to buy it, how much they want to do for themselves, how much they want us to do for them. IKEA's vision of communication is that it must be straight-forward, informal, authentic and where possible, face-to-face.We see a historical role for ourselves within the industry and the market in which we operate. In many ways we think we are creating the company of the future, and this is very exciting for all involved. This sense of mission enables our employees to transcend the day-to-day details of often mundane work and to see themselves as making a contribution to the wider society. Retailing involves massive attention to detail, to control of inventories, to timely re-ordering, to spotting trends. With so vast an array of numbers, our errors and omissions pass before our eyes in an endless stream. But all we ask is our employees learn from their mistakes. We can all too easily drown in statistics, and so it is vital to share corporate values and to agree on what feedback means about the fulfilment of those values. Only if you are committed to improving trends are statistics meaningful."
Leaders invest in communications to accelerate the future
This is where the essence of leadership and the essence of investing in mass media coalesce. Unless a company's brand architecture is being used to cultivate this sense of purpose, leaders and mass media risk being conduits for squandering enormous resources in terms of money, and people's time, energy and working purpose.
On a first visit to Japan, more than a decade ago, we recall what then felt like a future shock of being told by a Japanese electronics company that they were proud to be giving fast moving goods a new meaning : that of marketing products with less than 6 months lifecycle and having the capability, if competitively necessary, to leapfrog 4 product generations ahead with their market offer.
A similar drive to revitalise is seen:
·in fashion markets where leaders action plan many seasons ahead
·toys, where eg Lego remains competitive against more high tech toys because "Lego theme" years are already planned beyond 2000
·packaged foods, where the added value is increasingly found in acting as an early passport to exotic taste sensations inspired from all corners of the world
·Disney, where anniversary celebrations are used to plot the history of the future. As far back as 1990, Disney CEO Michael Eisner explained the company's future-now culture like this:
|Realisation of the future at Disney|
I've probably thought through every year through the turn of the century. Things take so long to do, you have to plant your flag and build your company around it.
An anniversary forces you to reanalyse your life. It forces you to recommit yourself to your vows and forces you to finish all your projects on time to get tem done by the anniversary...Deadlines are probably the strongest creative tools I know of. You've got to do it. You have to get your act together. The anniversary philosophy is much more than marketing.
In "Competing for the Future", Hamel and Prahalad add to marketing's old four P's (Product, Price, Promotion and Position), marketing's new four P's:
·global Preemption, eg suitably foreseen core competences
·Predisposition, eg global consumer awareness from banner branding
·Proximity, eg global access to national distribution channels
·Propagation, eg fast global roll out of any new world class product offer
Our ninth P for Purpose reminds us that world class employees need highly motivated stamina. Constantly reaching out for the stars is a peculiarly tiring thing to do unless you have pride in the mission.
We would bet that the big losers of the next ten years will be branded companies which go global but whose leaders forget:
·their employees' need for purpose
·the need to foresee what accelerating the future means in their sphere of business - globally and locally.
In spite of many honourable exceptions, too many Western corporate leaders (1985-1995) seem to have lost the lust for ensuring that their companies purposefully take advantage of change. Bartlett and Ghoshal explain that organisational danger signals are currently widespread.
|Whose purpose is being served?|
Structure follows strategy, and systems support structure. Few aphorisms have penetrated Western business thinking as deeply as these two. Yet they and the management doctrine they have given rise to are no longer up to the job.
Neither the valueless quantitative terms of most planning and control processes nor the mechanical formulas of leveraged incentive systems nurture employees' commitment or motivation.
In most corporations today, people no longer know - or even care - what or why their companies are. In such an environment, leaders have an urgent role to play. Obviously they must retain control over the processes that frame the company's strategic priorities. But strategies can engender strong enduring emotional attachments only when they are embedded in a broader organisational purpose. This means creating an organisation in which members can identify, in which they share a sense of pride, and to which they are willing to commit Bartlett and Ghoshal, Beyond strategy to purpose, Harvard Business Review, Nov/Dec 1994
Avoid a stagnating state of affairs by adopting cultural priorities like those of Nestle's Helmut Maucher, profiled here in the EIU's report "Winning in the global marketplace":
The common thread that binds Maucher's Nestle together is a reliance on management style that is more product and people oriented than systems oriented. "Personnel policy is the key to all else" Maucher says " Ultimately it is a question of character, sense of responsibility and moral integrity". He has articulated these concepts in the following "six qualities of corporate leadership":
1 Courage, good nerves and composure;
2 The ability to learn, an open mind, perceptiveness and vision;
3 The ability to communicate and motivate;
4 The ability to create an innovative climate
5 Thinking in context
6 Credibility - practising what you preach
The creation of advantage at Nestle has come about through its identification and adaption to the mentality, habits and situations in the countries where it operates "with of course a dash of the Swiss virtues" Maucher adds "and the Nestle spirit of mutual cooperation". He tries to combat complacency. "Although Nestle is a successful company, it worries me sometimes," he says "We have seen many companies go under through over-confidence. If people are overconfident and contented, they have a tendency to think they know all the answers. They are no longer conscious of the changes which are taking place in the world. So my main job is to keep alert and achieve the right balance between contentment and awareness of change." (See also Benchmarking of Nestle)
Once you realise that global branding works at the highest level by combining the service esprit de corps and accelerating the future, you can appreciate what a brilliant idea United Airlines is executing in the following script. It's extracted from one of the company's inflight magazines - a media which reaches both staff and customers. As an approach for aligning the cultural values of United, it makes basic Hoshin Planning look like a somewhat primitive tool.
|IN THE COMPANY OF WARRIORS|
Circumstances compelled me to view my co-workers' jobs through their eyes, their minds, their hands. And through this perspective, I glimpsed not only my own future, but the future of United Airlines.Alan Cockrell, United Airlines First Officer, published in United Airlines in-Flight Magazine : Hemispheres, February 1995I've watched a hundred sunsets from the cockpit, gazed at a thousand contrails, crossed a million miles of ocean, cruised beneath a billion stars, always musing, pondering how privileged I am to fly these magnificent jets, always thankful for the most fabulous of jobs, with the most esteemed of corporations. But my most profound comprehension of what this job is all about came when I turned my attention backward, into the cabin on a dark lonely night in Nashville, after all the passengers had left.
I must admit it wasn't the sort of lofty ideals of teamwork, loyalty, or even compassion that motivated me to do it. I was commuting back home from Chicago at the end of a four-day trip - I wanted to get home. But my car was having troubles, and I had accepted an offer for a ride home from one of the three ground service personnel who was cleaning the Boeing 737 for its nightly bed-down. My motive was clear : the sooner they got done, the sooner I got home. I did the unthinkable. I - a pilot - rolled up my sleeves and grabbed a dust cloth.
The work was harder and longer that I anticipated. My workmates eagerly supervised my efforts to gather the trash, clean the overhead bins, and wipe the tray tables. They were fussy over the haphazard way I arranged the seat belts. Not neat enough. I had to redo several rows.
Throughout 20 years of military and commercial flying, I've always been meticulously concerned with an aircraft's mechanical condition, but this was something totally new. And if the job was subordinate to the maintenance of the plane's engines and engineering systems, you could never convince my workmates of it.
Yet what impressed me the most were the subjects of their constant bantering as they worked. Rarely had they spoken with a pilot. They peppered me with questions about flying and the mysterious workings in the cockpit, which they had often marvelled at during the still hours of the night shift. But most fervently, they wanted to know how "we" were doing.
"We?" I asked.
"Yeah, you know - the company," one of them clarified. "Do you think we're doing as well as they say?"
I wasn't sure what she meant by "they". Probably company news releases or the news media. I guess to them I was like a soldier returning from the front. "We're doing great", I assured them.
And we are. We're part of a grand experiment, the economists say - the largest employee-owned corporation in history. But to the ground service crew and me, this is not an experiment, this is life. We will live it and make it work. Together.
I had always tried to maintain a proper perspective for my job by being constantly mindful of the lives and trust of those customers seated in the cabin behind me. But from that point on, I resolved to add another dimension to that awareness. I'll always recall the grinning faces that I worked with that night and how they were every bit as essential to United Airlines' success as we pilots are.We finished our work and shut the power off. As we walked toward the employee bus stop, I saw them taking a last glance at their airplane - the sleeping Boeing, glistening in the moonlight. Then I realised how arrogant I had been in presuming to be the soldier returning from the front. The front was there. And I was in the company of gentle, but determined, warriors.
Brands are the company's commercial licence to invest in medium-term foresight
In a business world populated by short-term consultants and reporting pressures, branding should harness the organisation's cultural motivation for investing in medium-term foresight. The leader must spot what an insult badly executed brand valuation is. Valuation may be fair game when deployed for some tactical margin for manoeuvre due to some financial technicality. But when technocrats suggest that they have some magic all-embracing algorithm for calculating the strengths of your marketing process, the quality of your organisational culture and the foresightfulness of your investments in core competences, it is time to free yourself from such shackles. Any accountant who believes that competing for the future can be reduced to a set of numbers is overstepping the profession's hallmark of prudence by a long way.
Wherever brands are in crisis, leadership is in crisis. Ironically, a company which is highly invested in brands that are losing their purpose will often remain highly profitable in the short-run. But in the medium-term its future is bleak because somewhere around the world a company will be investing in accelerating the future. One of this competitor's purposes is to create a discontinuity in the added value chain of the sphere of business and to accelerate this future shock to the particular disadvantage of competitors with a weaker sense of purpose.
In our era of global communications, the essence of powerful leadership is to establish a cultural climate and organising sense of purpose which prioritises confidence in accelerating the medium-term future and perceives brand organisation as the integral means for achieving this.
Core corporate or banner brands ought to have rights which are given organisation-wide respect. After the apparent debacle of new Coke in 1985, there was widespread acknowledgement of the irony that while brand marketers are mortal, great brands need not be. But this hides a greater irony : organisations can kill off their greatest brands if they do nothing about major environmental trends.
The leader must detect potential killer trends and ensure that overall organisational culture and specific systems of brand management are taking proactive steps to ensure the brand's right to at least survive - and preferably to use the trend to its own advantage. In our view, there is not an important brand process in the world that can afford to dismiss all four of these potential killer trends. They require no advance action:
·globalisation in all its forms
·new configurations of partnerships across the added value chain, eg Cott and co
·new media economies and integrated models for the brand mix
·new technologies and communities of learning due to computers in communications
Leaders should be constantly rehearsing this acid test:
·prioritise potential killer trends for every core branded business, and then ask:
·does the way in which the company organises its brand process encourage employees in all departments to help the company to respond to this particular change?
Once the leader has identified key cultural challenges, one constructive way forward is to prioritise one as the year's challenge. By the means of Hoshin Planning invite everyone (or every departmental head) to respond in one to one correspondence designed to elicit:
·what personally will you be doing about this challenge?
·is there anything within the organisation which is impeding you from taking other constructive actions?
·how will you measure the process effects of your intended actions?
Hoshin Planning is an organising process for practising the dynamic style rules of leadership which Bartlett & Ghoshal have summarised.
|Leadership sense and system|
Leaders embed clearly articulated, well-defined ambition in the thinking of every individual while giving each person the freedom to interpret the company's broad objectives creatively. Specifically :
·they articulate corporate ambition in terms designed to capture employees' attention and interest them rather than in terms related to strategic or financial goals
·they engage the organisation in developing, refining and renewing the ambition.
·they ensure it is translated into measurable activities to provide a benchmark for achievement and a sense of momentum
Through iterative tuning of the Hoshin Planning dialogue - eg by seeing what expected answers are not volunteered - the leader can decide what can be left to departments of the organisation and what needs interdepartmental leadership. And cultural operating rules can be adjusted.
For example consider these two opposite corporate mindsets:
·We seek partnerships with select demanding customers whose opinions are central in influencing product development
·This company does not, as a matter of policy, involve our customers in new product development because if they get wind of something new then they stop buying our existing products
You can tell which organisation subscribes to Hoshin planning. And you can imagine what the destiny of the other company will be.
Brand Chartering : top-of-mind brand knowhow
A brand is much more powerful if everyone who contributes to its added value is working the same script. So far we cannot think of a Brand Chartering project where members of the business team have started with the same script in mind. There is a mathematical reason for this. The case study in chapter 16 produced a relatively short Brand Charter, involving six essential keyword meanings of the brand and about ten lead thoughts (as well as indexing to more detailed company systems). Combinatorial logic suggests that the chances that two people will have the same 16 lead ideas top-of-mind are remote unless you have teamworked to achieve this consensus. As a business team usually comprises more than two people, it becomes clear why the most wasteful forms of brand warfare are those fought within an organisation.
The importance of having these top 16 brand codes as the common starting place in the minds of all members of the business team cannot be overstressed. This empowered them to utilise the same leadership perspective in contributing to some very subtle decision making on evolving the brand's vitality in consumers' minds. One of the workshop sessions during the early stages of this Chartering project was provocatively titled "we've come to bury ABC brand or to praise her". Somewhere between global and local marketing, there is a real danger of missing out on understanding real consumers. This potentially deadly communications gap is not resolved by adding an extra regional layer of marketing; it is resolvable by Chartering a living script for the brand which integrates the best of global and local understanding as well as the best of interdepartmental knowhow.
Like the best film scripts, the Charter as a brand's living script must be edited by a person of empowering vision and authority. He or she will need to make leadership calls but these decisions should be formed in a way that
·enables teamworking to gel
·recognises who in the business team is closest to specific elements of the service raison d'etre of the brand for each of its evolving marketplaces
Leaders are also responsible for the protective role of caring for a company's reputation. When we say that branding is concerned with leveraging high visibility, we are assuming that branding is a consciously chosen strategy to magnify the opportunities and risks associated with claiming a leader's reputation. It is vital to propagate an organisation-wide awareness that the substance of reputation may only be as strong as your weakest link. The following review summarises this.
|Reputation - king piece in boardroom chess|
Suppose that we are playing chess with the pieces of goodwill that a company owns. Corporate reputation is always your king. In many cases where the company's name is also synonymous with its biggest brand (eg Sony) or visibly marketed as the corporate sponsor of product sub-brands (eg Nestle's Kit Kat), corporate reputation is also your queen.
The most naive kind of move endangers both king and queen, through failure to understand the human dynamics of communications. Not only does every corporate stakeholder (or audience) have a view of the company's reputation. A performance conceived with only one stakeholder group in mind may instigate a chain reaction that endangers the quality of your reputation with all stakeholders.
To the British reader, the most quotable example of such a chain reaction was Gerald Ratner's quip that the durability of some of his company's jewellery had a consumer shelf-life on a par with a Marks and Spencer's prawn sandwich. Although this joke about the crap segment of the jewellery market was actually made to an audience of city analysts, it was pounced on by tabloid journalists. The chain reaction quickly handed on to Ratner's erstwhile consumers - and prospective gift-givers - was that of the emotional let-down which humans feel when a relationship publicly crashes from smart to crap.
Progressing beyond the naive, watch out next for reactive moves and others which exhibit less than complete awareness of the symmetries of the reputation game. These too will often put your king and queen in check as Grahame Dowling's book on corporate reputations from an Australian perspective reveals through a variety of valuable citations including:·The Westpac Letters Affair in which a disgruntled employee (of Australia's second largest retail bank) leaked some confidential letters showing some of the bank's advice to customers on certain types of foreign currency loans was questionable. The gut reaction of the bank's public affairs unit - legally exact but communications insensitive - was to hand the matter over to the lawyers. Although the court finally ruled in favour of the bank against the employee's actions, the impact on the reputations of the bank held by journalists and customers was negative to the point that it contributed to the resignation of the then managing director of the bank.
·Thinking big for whom: "During the 1980s, Australian steel and resource company BHP, called itself 'The Big Australian'. Its management, employees and shareholders liked being associated with Australia's biggest company. Also, the company's public relations group thought that reminding politicians and public servants that BHP was a big contributor to the country's economy was a good idea. For customers of the company's steel products however, being reminded that BHP was The Big Australian was not highly valued. It just reminded them of the power the company used when allocating its steel production to subservient customers".
If combining your king and queen can result in such exposed positions, why do it? Reasons are various ranging between:
·the statesmanship status that is accorded to a company which knows its integrated values so well that it can even initiate best practice responses whilst in the midst of a crisis
·potential problems besetting companies which consciously or subconsciously appear to hide behind their brands
A classic case of corporately branded statesmanship relates to Johnson and Johnson's Tylenol - when this top-selling US analgesic was contaminated with cyanide by an unknown person. Johnson and Johnson's responses to this crisis were immediate nationwide product withdrawal, total corporate sincerity and refusal to relaunch the product until a tamper-proof package had been innovated. Those responses are now regarded as textbook corporate management of a crisis. Here was grandmastership of corporate reputation in action, confirmed philosophically by J&J Chairman Jim Burke's summing up:
Organisations which do not use the company name publicly, (ie where king and queen are not combined) are more prone to neglect corporate reputation. This occurs wherever:
·nobody has integrated charge of corporate reputation
·no measurements of corporate reputation are being monitored across the different stakeholder groups.
Such lack of process leaves you uninsured against two main kinds of eventuality:
·overcoming disadvantages at time of crisis·taking advantage of any trend among consumers or other stakeholders of wanting to know more about the company behind the products"
We suggest that the most natural form of the global branding process - for would-be disciples to learn from - begins and ends with the reputation of world class companies. Human beings expect that such organisations will behave with equal levels of care and attention across all their market borders. Where they do not live up to this, damage limitation is a misleading term because it suggests that image control can mask reality. New dynamics of globalisation and openness in communications reveal that damage transfer can cross the borders of the world class company's reputation at something approaching the speed of light.
|People are global when as consumers they have access to information about goods and services from around the world|
Kenichi Ohmae, The Borderless World
Brand Architecture is the megaprocess of business
A company's brand architecture interconnects with all other core business processes. Consequently, Chapter 11 has proposed that the ceo must be able to take a top level view of brand architecture. He or she needs enough information to gauge whether the investment foci of the brand architecture matches with his or her strategic intent in matters such as core competence building. Unless this happens the company will be giving signals to the outside world that are not in line with where it wants to go. Mix this with increasing confusion inside the organisation's departments and the mega-result might be described as a vicious circle of mis-intent.
|Only truly global companies can achieve "global localisation", that is, be as much of an insider as a local company but still accomplish benefits of world-scale operations.|
Akio Morita, Sony
A well ordered brand architecture gives rise to the evolutionary form of the global networking organisation. This can harness such newly critical survival characteristics as flexibility, flat management structure, competent people and purposefully aligned competences.
It is also time to revisit the question of who should be in charge of a business megaprocess. We believe that top level brands in a company's brand architecture need to be perceived as at least quasi-corporate. In some companies there may be only one top company brand, in others there could be ten : in some kind of confederation that network into the organisation's core competences. This makes good sense because internal partnerships can be more constantly secure than external ones. The important thing is that any quasi-corporate brand has its own CEO, by which we mean a person whose decisions cannot be overtrumped by someone else higher up the organisation.
There are two particular reasons for this.
First, for the brand to be a megaprocess, the CEO as architect of the networking organisation must ultimately call decisions relating to how those responsible for specific processes/competences cooperate together. In some cases this may be the power to flatten the organisation if necessary; in other cases the leader's ability may be manifest in inspiring an integrated service culture rather than an operation of functional hierarchies.
Second, the health of the top level brand cannot be measured simply in yearly financial instalments. The most powerful brands are multifaceted investment channels. It may be that Wall Street will always call for yearly reports on financial performance, but this art must be blended with more realistic facets of brands as megaprocesses such as:
·reputation, where one wrong act can sew a cancer in a corporate brand (killing off goodwill in the long-term, even when the immediate prognosis appears to be no damage done)
·core competence building and pre-marketing investments, which are bound to involve longer-term paybacks if a company is competing to develop world class produce
·service motivation/stamina/focus/knowhow of employees which often involves getting onto a learning curve whose dividend shape is purposefully exponential
·long-term robustness of the company brand's channels and presence of preference in front of consumers, and other stakeholders
·taking just-in-time advantage of fundamental discontinuities in added value chains (this book has suggested that megatrends such as globalisation mean that now more than ever before hugely significant opportunities exist and require urgent leveraging by the truly foresightful corporate leader)
It may not be entirely an accident that some of the world's most dynamic companies -admittedly of may different leadership hues such as employee owned United airlines, Branson's rendering of virgin lifestyles, Levi's global business enterprise - have recently unravelled their ownership structures from Wall Street's punter capitalists and/or those bankers who seem themselves to have lost touch with medium-term realities. (We write this in mid 1995 when such famous banking brands like Baring's and Credit Lyonnaise seem to have been something less than world class either in control or vision).
So we are not saying that confederations of CEOs may always find it easy to work with each other. On the soft side of being mutually accountable, they will need all the leadership graces of trust in each other's shared visions. On the hard side of accounting, their plans will need to be synchronised so that cash is flowing from some while investment building is occurring in others. As indicated, they may have to take the company private if they feel threatened by too many "punter capitalists". Or a company may need to decide that, after all, branding is not a competence that it can manage. However, since we believe that we developed the term World Class Brands before anyone else in the West, we have a right to foresee what we mean by this as a core competence. The vision that we have just outlined is close to what we think the term possessing world class branding competence will mean to companies in a decade from now.
Future wealth creation resides in strong brand leadership
In his prescient paper, Stephen Parkinson provides evidence on how critical branding decisions have repeatedly created and destroyed great companies, and national industries. As marketing professor at the Management Centre of the University of Bradford, Stephen is well situated to catalogue evidence on the importance of brand leadership spanning over 130 years. His first citation involved the death of the local worsted industry reported by the Bradford Observer of 1868:
"The time has gone by when England possessed by so many political, geographic, natural and artificial advantages over other nations that she had only to ask for a clear field and no favours to be sure of outdistancing her competitors. Roubaix attracts our buyers of fancy goods and Belgium undersells us in worsteds abroad. It is neither wise nor right to deceive ourselves that while some of our neighbours have advanced we have, in some departments, stood still and in others moved more slowly".
Stephen concludes that World Class Marketing has six foundation stones
1) Vision and leadership
2) Understanding the customer
3) Recruitment training and motivation of employees
4) Developing a total quality operation
6) Branding - and this is the keystone.
Those who voyaged behind the Iron Curtain in the late seventies or early eighties could see a system where brands were as conspicuously absent as the cultural lack of market competition. Strong brands, flourishing media, free competitive markets and wealth creation go together. In 1983, your author contributed to a future history book which foresaw that wealth creation in the USSR was so visibly not happening that the system would fail, the Iron Curtain would come down and free market structures would start to be built. We were never intent on forecasting dates exactly, and indeed the Berlin Wall fell a few weeks before the date predicted in "The 2024 Report". It is as evident to us today that what used to be a strong organisational model for branding in days when companies could profit from segmenting local markets cannot be a strong model for globalising businesses competing in future markets.
Corporate systems are prone to developing a lot of built-in inertias at interpersonal levels which only corporate leaders can change. Today, in making the exhortation which follows, we are as confident in its forecast as we were when writing in 1983. The CEO of any company that is highly invested in brands who does not believe that responsibility for the drama of brand leadership needs to be near the top of his or her personal agenda will have abrogated his or her company's right to brand early in the new millennium.
World Class Marketing involves organisational learning of the highest order regarding service process and leadership purpose. The CEO needs to clarify a Declaration of Interdependence for Brand Leadership and his or her part in orchestrating organisation-wide commitment to this. Culturally relevant beliefs for such a Declaration have been listed.
Brand Architecture must be aligned to core competence acquisition, organisation structure and strategic intent. The CEO can give the lead by ensuring clarity of purpose is propagated organisation-wide. We have recommended circulating knowhow round a feedback loop which makes integrated use of five toolkits for company learning.
|·Strategic foresight (focus sphere of business and core competences)|
·Refine ownership and monitoring roles vis a vis brand process and corporate reputation
Future wealth creation depends on leadership of strong brand organisations. Brands, if you invest them, must inter-relate with every employee's working vision of winning for consumers and customers.