Stop the narcissism

How do you identify the red flags in a strong brand?

A strong brand in itself is not a problem. But when the top management assumes that a strong brand can continue indefinitely, it becomes a problem. The common assumptions are that customers will continue to come back or that they can indefinitely continue stretching the brand into newer categories and so on.

“It's a case of arrogance and also a lot has to do with misplaced assumptions,” says Unni Krishnan, managing director, LongBrand Consulting. Most iconic brands fall because they overestimate their strengths to such an extent that those very assumptions come back to hurt them.

Short-term profits

Nikos Mourkogiannis, chairman, LongBrand, cites the example of Westinghouse Electric Corporation which was then the second largest company in the world.

The corporation was the first employer of Mourkogiannis after his graduation from Harvard.

The company, which already had 56 business units, was then planning major investments in real estate to build smart cities in which most managers had no experience. “I was soon a witness in the bankruptcy court,” says Mourkogiannis.

Most brands are milked dry for short-term profit maximisation because the market capital of companies is tied up with that, adds Krishnan.

“It comes from one of the most colloquial concepts called shareholder value maximisation.

Most discussions on brand equity are based on qualitative dimensions but in reality it has to be about long-term cash flows that will be realised in the future from the brand,” he says.

In such a scenario, the call for the management is to decide on whether they should invest in the long term by forgoing some aspects of the current profits.

“These decisions are completely flawed in the board room,” says Krishnan. In most cases, the sole purpose of the brand and company has become short-term profit maximisation. “This is typically how culture, values and innovation go for a toss,” says Krishnan.

Take the example of Kodak, which was a superpower of a brand, leading in all aspects. The company had a strong film business, but it also had a set of digital products.

Kodak was 15 years ahead of competition and had ramped up its digital technology but its managers continued to push the existing film business. The leadership of the company was about serving the masters on the Wall Street. In this case, investment in a brand need not mean hiring a brand ambassador or making a big-bang marketing campaign.

Another example he cites is of Volkswagen, which had one of the best advertising campaigns and was perceived to be the global leader in green engineering and diesel technology. “What did they do inside?” he asks.

Image-culture mismatch

In most cases the brand builds up a certain set of values but the culture of the company is completely divorced from it.

That's why the lifespan of corporations is constantly declining. This happens particularly when the compensation of leadership is tied up with market capital improvement, says Krishnan.

The problem with brands is that most of the time brand managers spend time with communication agencies thinking that these are the people who will rescue their brands or take it to the next level.

Krishnan says, “While a part of the attention needs to go to that section, a more compelling argument for brands has shifted to the lifetime value a brand can generate.” This is a discussion that has escaped most brand managers.

Most brand managers engage in narcissistic self-fulfilling discussions on these brands. It calls for an urgent need to reframe the rules of marketing.

This is the second part of a series on why brands need a purpose.

To be continued

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