Wednesday, July 28, 2010

Brand Building, Beyond Marketing

Consumers are becoming more suspicious of traditional branding. Here are five steps to regain their trust.
by Nicholas Ind and Majken Schultz
Not so long ago, brands were … seemingly powerful, and virtuous. Any inconvenient truths were hidden by glossy packaging and one-way, big-bang marketing campaigns. Now, …  people can see behind the marketing facade and are questioning what they are told. … This has created a challenge for many brand owners, because they are ill equipped to cope with greater openness. But the most innovative companies are recognizing the way perceptions are changing, and are adapting their branding strategies accordingly — in some cases, reinventing them entirely.
… More broadly, many enlightened organizations are moving branding entirely away from communications and toward connecting strategy, culture, and a wider stakeholder involvement. … These organizations have understood that brand building (even if the terminology of branding is not used) is a participative process involving the whole organization and is the responsibility of all employees. The Netherlands-based finance group Rabobank, for example, … recognizes that its strength is rooted in its closeness to customers, that its brand is built primarily in the everyday contacts that people inside the bank have with members. It is in this continuous dialogue between customers and employees — both online and offline — that the company’s brand is always evolving. …
Similarly, the Danish toy company Lego Group, … has recognized that its brand is not created by the marketing department, but instead by the larger organization in its interactions with customers and other stakeholders who have become part of its community. Like many other organizations, Lego built its business through a controlled approach to intellectual property. … However, as computer games grew in popularity, the company feverishly tried to adapt to new trends and opportunities in the marketplace. The result was that the brand became increasingly irrelevant, as people lost track of what it stood for and confused employees struggled to deliver a trusted Lego experience.
…[A] new CEO, Jørgen Vig Knudstorp, who took office in 2004 … realized that customers, who were using and adapting  … the Lego Group’s intellectual property, were not threatening the brand, but were actually redefining it. (See “The Promise (and Perils) of Open Collaboration,” by Andrea Gabor, s+b, Autumn 2009.) One of the secrets of Lego’s ability to engage its stakeholders with the brand is that it took advantage of the small opportunities that emerged along the way: from giving consumers the “right to hack,” to inviting small groups of passionate consumers to headquarters to work with the designers on new ideas, to the new CEO accepting the invitation to talk to the brand community on their turf. … By opening itself up to an active involvement with these enthusiasts, the company has been able to tap into a rich vein of innovative thinking and has been able to once again make the brand relevant.
A New Role for Branding
The Lego Group is an interesting example of open innovation … . It indicates a significant shift in the way we think about brands and points to a future that will be radically different — … where managers will have to give up the idea of control over a brand and accept instead a fluid, uncertain world where a brand evolves in dialogue with others. This in turn will require both openness and trust.
Although we might argue that the very essence of brands is about trust — in the sense that consumers should be able to trust the promise that a brand name makes — in reality trust has often been missing. Organizations have trusted neither their customers nor their employees. …
A similar situation exists with regard to consumers. Rather than being open and participative with consumers, many organizations assume that the people buying their products and services can’t be trusted. …
How, then, can trust be engendered? Trust has to be earned over time through the experience of promises delivered, which means less of a focus on telling people about how great your brand is and more on building relevant content. … [The] Dutch insurance company Interpolis, … decided that instead of asking customers to provide receipts and questioning their claims, it would trust them. Former Interpolis executive board chairman Piet van Schijndel (now a member of the board of directors of Rabobank) said in a speech that the company “had to let go of the old-fashioned concept of an organization built on mistrust and rules. Instead, we started focusing on trust between people; between ourselves and our customers and between the management and the staff.” The result was not only greater operational efficiency, but also a decline in the number of claims.
We would suggest that brand executives, … should … work to trust those around them and become active participants in nurturing brand dialogue … .
Five Imperatives to Regain Trust
As the shift from a marketing communications–driven approach to brand building toward an organization-wide, participative approach gathers pace, managers will have to become aware of some new imperatives — but also some new dilemmas and challenges.
1. Content not communication. It is what you produce and how you deliver it that matters if you want to build a relationship with customers. …
2. Mind your language. Be aware that the language of branding is a turnoff inside many organizations, and that the hyperbole of marketing communications is increasingly ineffectual. …
3. Let go. … It is employees and increasingly customers who self-manage brands. …
4. Open up. There is a greater requirement to make the brand open to the influence of others. …The most important mental shift here is to stop seeing users as an object and to start seeing them as a source of creativity and value creation.
5. Just do it. … [Accept] that there will be successes and failures. Learn from open source practices, and experiment. …
Opportunities and Dilemmas
… This brand new world is one of freedom, yet managers have to confront a number of challenges: greater transparency increases the volume of stakeholder interactions, co-creativity provides input but also resistance from the conservatism of many brand enthusiasts, and more dialogue can undermine the coherence of the brand.
There are no easy solutions to these challenges, but we should pay attention to [the 2009 Spanish, European, and World soccer club champions, FC Barcelona’s Chief Executive] Joan Oliver i Fontanet’s argument that brand building (perhaps like soccer) is an art that requires intuition and a willingness to adapt to ever-changing circumstances. … This new freedom has the potential to inject dynamism into brands, so that they become continuously innovative and create real value.

Author Profiles:

  • Nicholas Ind is the author of 10 books, including The Corporate Brand (NYU Press, 1997), Living the Brand: How to Transform Every Member of Your Organization into a Brand Champion (3rd ed., Kogan Page, 2007), and Branding Governance: A Participatory Approach to the Brand Building Process (with Rune Bjerke; Wiley, 2007). He is an associate professor at Oslo School of Management.
  • Majken Schultz is a professor of management at Copenhagen Business School and a partner in Reputation Institute, a private advisory and research firm. She has published widely in the field of management and branding and serves on several corporate boards. See
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Wednesday, July 14, 2010

It Makes Sense to Adjust

Business transformation is now a continuous process that most companies haven’t mastered. Here’s a formula for managing ongoing change.

strategy+business magazine
by Vinay Couto, Frank Ribeiro, and Andrew Tipping
It used to be that a business transformation was a once-in-a-lifetime event, the sort of fundamental reset prompted by a rare, short-lived disruption such as a new technology, a devastating scandal, or a dramatic shift in costs. But if the recent economic upheaval reveals anything, it is that companies of all sizes, in all industries, are operating in a more volatile, less predictable environment, and that change has become a way of life. To navigate such a rocky landscape, companies must be ready to repeatedly transform themselves — indeed, to institutionalize the capacity to alter strategies again and again — as business conditions require….
The problem is that most companies don’t have an adequately proactive road map for transformation.  … [If] an organization prepares for transformation (perhaps when it is not occurring), steering through it is far less difficult.
Each company’s strategy for approaching transformation falls into one of three categories. These categories in turn determine the level of transformation — the timing and the magnitude — that the company can support.
1. Reactive. This is the default transformation strategy; it is minimal, and has become second nature to most seasoned executives. A change in circumstances provokes a short-term response, generally an abrupt shift that requires little cross-company coordination or follow-up. … Problems arise when executives try to apply this approach to situations that call for more sweeping and highly detailed transformation. …
2. Programmatic. This strategy is more comprehensive and is appropriate when major change is required and a company has sufficient lead time. In such circumstances, the company launches a widespread change initiative across the lines of business that are most affected. A cross-functional program office is set up, tactics are identified, milestones are established, executives are assigned to oversight, a communications program is launched, and progress is tracked.
These programs can be effective in dealing with a contained event or threat, such as a new competitor or a new product from a rival, and their potential reward is greater than that of the reactive approach because they are more forward-looking. But as the name of this category implies, the transformation is a program — a systematic, planned sequence of activities designed to achieve specific goals within a specific period of time — and, thus, the outcome takes longer than a reactive transformation.
3. Sense-and-adjust. This is the most long-term and sustainable strategy, but only a few companies have successfully implemented it. Unlike the first two approaches, sense-and-adjust is dynamic, constantly and consistently smoothing out volatility in areas of business subject to swift and dramatic change, such as research and development or frontline operations like manufacturing and logistics.
Sensing is an ongoing effort to gather and analyze data on current and future business conditions and, more important, translate it into likely outcomes. The sensing process should leverage baseline planning information — what’s captured in strategic and operating plans — and synthesize it with key performance data to form a single “dashboard” of actionable information that can be used by business unit heads or corporate leaders in functions like IT, HR, or marketing….
Adjusting is the process of altering business strategies on the basis of sensed outcomes. In this phase, which is done in tandem with sensing, business unit or department heads assess the data to determine possible resource and capability trade-offs. …
As adjustments are made, the sensing capability picks up and continues the cycle, both scanning the horizon for market shifts and monitoring the execution of these strategic responses. Sensing does little good in the absence of adjusting, and vice versa.
The sense-and-adjust approach to change is not the traditional stutter-step strategic planning process in which business units are summoned every six or 12 months to present their take on the market and their performance expectations. The sense-and-adjust process is continuous, incorporating new information and forecasting outcomes and expectations constantly. Companies that have mastered the skills to handle the programmatic approach and have an organization that is reasonably resilient — flexible and anticipatory — are the best candidates for this sustainable strategy. …
For some companies, particularly those without the mature planning processes and deep leadership bench necessary to implement a full-fledged sense-and-adjust strategy, a programmatic transformation can offer a clear path toward that goal. …
If nothing else, all companies must recognize that the pace and magnitude of change is far faster and greater now than ever before and that transforming their business is no longer something they can avoid, defer, or out-manage. Even small moves to increase an organization’s sense-and-adjust skills will reap significant and sustainable rewards.

Author Profiles:

  • Vinay Couto is a partner with Booz & Company in Chicago. He focuses on global organization restructuring and turnaround programs in the automotive, industrials, and consumer packaged goods industries.
  • Frank Ribeiro is a partner with Booz & Company in New York. He focuses on overall corporate transformation and associated capability-building programs to increase an organization’s effectiveness and efficiency.
  • Andrew Tipping is a partner with Booz & Company in Chicago. He focuses on large-scale organizational transformation to increase the effectiveness and efficiency with which companies meet customer needs.
  • Also contributing to this article were Booz & Company Senior Associate Matthew Siegel and Principal Curt Mueller.
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