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Wednesday, July 28, 2010

Brand Building, Beyond Marketing

Consumers are becoming more suspicious of traditional branding. Here are five steps to regain their trust.

strategy-business.com
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 http://www.majkenschultz.com/.
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