Category — Brand strategy

Brand Architecture is a key strategic tool to organize a business so that audiences will understand what you offer and how they can engage.

The rules for organizing brands today are evolving. There are important forces that have changed how external audiences engage with brands. Probably the most important is technology and how it has enabled people to know more, purchase more efficiently, and decide more quickly. The consequence is that a company and its products and services need to be communicated with a new simplicity so that all key audiences easily understand the business you are in, how they can find what they need, and at the same time understand the breadth of value your company brings. This is the goal of building a strong brand architecture.

Why it is an Imperative?

Muddled Offerings. The most common branding issue we see today is that corporations have a very muddled array of products and services that are not well organized and therefore difficult to figure out. This is caused by a variety of circumstances:

• Consolidation through acquisition, merger or organic reorganization
• Evolution of a business into new areas that are either completely new or adjacent to existing capabilities
• Expansion into higher margin businesses from a legacy offering
• Spin-offs that require new levels of explanation.

Need for New Understanding. The shakeout from the economic trough we experienced, while difficult for most businesses, has presented the opportunity to look at the resulting business through a new lens and to sharpen focus to generate new levels of interest and generate higher revenues. Further, this sharpening can have enormous benefit for the financial community, helping them not only understand the business better, but also have more confidence in a company as it moves forward.

Galvanize and Engage Employees. In addition to the obvious outward value of a clear and easy-to-understand brand architecture, in many cases the employee base doesn’t always understand the breadth of what their own company offers, how the parts are interrelated, and the opportunities to expand customer relationships. Just imagine the power if every employee more fully understood your business and could be a true brand ambassador.

So focusing on a clearer and more understandable framework is an essential task in the new economy. The good news is that there is a disciplined process to determine the best way to organize and communicate a business’s offerings to more easily engage with key audiences.

Organizational Architecture Should Not Drive Brand Architecture.

Brand architectures should be designed for external (outside) audiences to “explain” a company’s business so that they can understand and engage. The easier it is for an external audience to understand, the greater the chances they will respond, whether it is a customer audience, a business or trade editor, or a financial analyst.

Companies are often organized for reasons that may not make sense to external audiences. The drivers of internal organization can include:

• Legal requirements
• Tax circumstances
• Financial reporting
• Legacy business history
• Acquisition complexity
• Leadership opportunities

But often these organizational decisions are not the way outside audiences see a company’s business. From their standpoint, they want to engage to find a specific product or service, and really don’t care how the company is organized. The consequence is that a company needs to have a “brand” architecture constructed from the outside in. While this sounds relatively obvious, getting internal leaders to agree is usually a significant challenge.

Below are some helpful ideas about how to engage the leaders to successfully develop an appropriate brand architecture.

What kind of Brand Architecture?

A Brand Architecture is a systematic means of focusing and organizing your brand assets to ensure that target audiences understand the breadth and depth of value you offer them.

There are several basic types of brand architectures that, in a pure or hybrid form, are the underpinnings of clarity. Each is developed by determining the best way to express the business vision through the lines of business.

A Masterbrand Architecture is a monolithic structure where, from a branding standpoint, all business units, subsidiaries and divisions share the same brand. The “Masterbrand “ is also sometimes referred to as the “Corporate, Umbrella, Parent or Mono” brand. Good examples of this strategy are FedEx and GE. In general, everything carries the FedEx and GE Masterbrand and sub-units are defined by descriptive language.

An Endorsement Brand Architecture uses a common endorsement for all of the operating units, and the parent brand functions in a subordinate manner to each operating unit brand. For example, United Technologies operates as a parent brand as it faces Wall Street, but each operating unit is identified by its own brand with an endorsement. The Sikorsky business is branded Sikorsky, “A United Technologies Company,” but uses the iconic “gear wheel” symbol, as does Hamilton Sundstrand, etc. To make matters more complex, sometimes the sub-brands of United Technologies use a legacy identity when facing specific customer audiences.

A Portfolio Brand Architecture, sometimes called a “Free-Standing Brand Architecture”, keeps separate identities for many or all of its brands. Particularly if there is sufficient marketing support for individual brands and it is believed the parent does not provide any brand equity that would benefit the individual brands, a portfolio architecture is appropriate. Procter & Gamble manages a portfolio brand architecture. General Motors also manages a portfolio of brands with little overt brand equity supplied by the parent.

An Ingredient Brand Architecture uses a principle brand (e.g., Intel or NutraSweet) as a common element in supporting and qualifying other brands. The premise is that if the ingredient is good, the brand it amplifies is better than without it. In the case of purchasing a PC, there is research that indicates that consumers look first for the “ingredient”, the (Intel) processor, before the brand it is within.

How do you decide which type of architecture is best? If you remember the golden rule (from the “outside in”), that should be the starting point. You start by determining which are the most important audiences. For most companies it is customers. But for others, it is financial & industry analysts, key trade media, and even governments. Therefore, the first task is to determine audience priority. The next step is to determine what each discrete audience needs to “hear” or understand in order to engage with your brand. You must look at your company from their point-of-view. This often requires outside help and research so that you can have an objective view of the marketplaces you serve. Almost every company we work with has a belief about how external audiences view them, and this view is naturally biased and often incorrect. Having objective insights also helps put in perspective internal beliefs that have built up over the years.

How do you engage the line of business and other leaders? Evolving to an external facing brand architecture is a process. It not only requires audience research, but also leadership team involvement so everyone understands their role in how the company speaks outwardly. Today, when companies have many different lines of business and products and services, it becomes imperative for the key stakeholders to work together to arrive at a brand architecture that serves both their individual need, but more importantly the corporate vision.

Where we have seen the most resistance is in situations where the broad leadership is not deeply involved. Because how a company portrays itself is so critical to the future, developing a strong, outward-facing brand architecture is a strategic mandate. Get the leadership involved and keep them involved.

Who should manage the process? Development of brand architecture is a strategic initiative and should be managed by the most senior corporate leader who can rise above line-of-business interests. In some cases it is the CEO, but more often it is the Chief Strategy Officer or Chief Marketing Officer. Among other values, strong brand architectures usually signal a new future while creating clarity. Thus, if a specific line-of-business leader is tasked with the initiative, the solution often becomes weighted in favor of that business unit, and not reflective of where the long-term business is headed.

Brand architecture can be a powerful tool to help a company accelerate its growth. Investing the time and effort to optimize a company’s brand architecture can deliver higher near and long-term revenues and profits.

For deeper insights, contact:
John K. Grace
President & Managing Partner
E: jgrace@brand-taxi.com
T: 203-618-1100

The tragedy of the day is Sears. They are nose-diving with no end in sight. After comparable store sales falling off between 16-17% in 2017, no one can see a way to reverse this trend. Wall Street ‘s collective view is that they will be lucky to survive 2018. They should have focused on reinvention all along.

What makes this so sad is they were not able to build upon the venerable brand equity established over generations. For much of the last century, Sears was the source of quality and durability for many things. It was literally where America went to shop. Most appliances that our grandparents counted on came from Sears. Their catalog was where Americans bought what they needed. Quality was assured. So powerful was the brand that it could carry the product offering of the “mail order bride”, then used by homesteaders who could look at a Sears and Roebuck or Montgomery Ward catalog and order a wife delivered to his home just as easily as an appliance. (The Zoosk, Match.com and eharmony of the time). That’s how embedded the brand was in our culture.

But things changed, and successive leadership never focused on reinvention to keep the brand relevant.

To prevent the erosion of a strong brand, leaders need to constantly evaluate where they are and where markets are headed. Of the powerful brands of the mid-to-late 1900’s, what happened to Kodak, Howard Johnson’s, Polaroid, Borders, and Blockbuster? Imagine the extraordinary brand equity each had built. At In the end, each brand did not manage their business into a changing future. Kodak didn’t believe in the digital revolution. Howard Johnson’s yielded being America’s rest stop to fast food chains, etc.

The big message here is having the forethought and will to acknowledge change can help a company navigate the future. It is about embracing disruption. Great leaders must continually make this a primary responsibility. Particularly with the ever-increasing acceleration of change, the mandate is here, right now.

One significant consulting firm that specializes helping companies focus on the future in a rigorous and strategic manner is Innosight. They have developed formalized processes to look at the future and manage to it. We have seen it in action and it is impressive.

Net… don’t put your head in the sand. Embrace that change will happen, identify what the future will look like and have a strategy to navigate there. If you do this well, you won’t become a Sears.

Tesla just announced that it is dropping “Motors” from its name to signal that it’s moving into  businesses other than cars. They will, at least in the foreseeable future, be an unparalleled sustainable energy company. However, at the pace they are moving, one can only imagine what businesses they might ultimately be in. Will that name hold?

Apple did this several years ago by changing its name from Apple Computer to Apple. Obviously, this was a smart move that helped them broaden their portfolio of products and services.

There are many reason why a company might move to change its name —an obvious one being a legal issue.  Beyond that, changes can be driven by consumer trends, broadening portfolios, over-coming negative perceptions, or just trying to stay relevant. For example, Kentucky Fried Chicken changed its name to KFC to avoid healthy consumers thinking about fried food. Or Philip Morris created new name, Altria, to be known as more than just a cigarette manufacturer, but a portfolio of businesses.

So, for fun, below are a list of several companies that completely changed their names. Can you identify who they are today?

AuctionWeb

BackRub

Blue Ribbon Sports

Brad’s Drink

Computing Tabulating Recording Corporation

Confinity

Datsun

Firebird

Jerry’s Guide to the World Wide Web

Lucky and Goldstar Co.

Pete’s Super Submarines

Quantum Computer Services

Sound of Music

Stag Party

Tokyo Tsushin Kogyo

ValuJet

Wards Company

If you think about these things and are considering a business transformation, step back and look at your name.

There are interesting stories behind how these names became the ones we know today. How many did you know?

AuctionWeb, the first on-line marketplace, became eBay

BackRub was the original name for Google, based on the mathematical term “googol”,1 followed by 100 zeros

Blue Ribbon Sports was the business that became Nike

Brad’s Drink was the original name of a soft drink developed by a pharmacist that became Pepsi-Cola

Computing Tabulating Recording Corporation evolved into IBM, the name of its Canadian subsidiary

Confinity, started as a Palm Pilot payment company, renamed itself to become PayPal

Datsun today is Nissan based on the strategy to unify many products one-der one brand

Firebird is the original name for Firefox, changed for legal reasons

Jerry’s Guide to the World Wide Web became Yahoo, standing for “Yet Another Hierarchical Officious Oracle”

Lucky and Goldstar Co. is today LG Electronics

Pete’s Super Submarines is known today as Subway

Quantum Computer Services is today AOL, a shortening of America Online

Sound of Music became Best Buy, based on a successful fire sale after a tornado hit the company’s main store promising “best buys” on everything

Stag Party was the original name for Playboy after a law suit was threatened by Stag Magazine

Tokyo Tsushin Kogyo was a radio repair shop that is known for making the first transistor radio, and today is known as SONY

ValuJet became AirTran after a well-publicized plane crash. Today it is part of Southwest.

Wards Company adopted the name of a retail format they owned to become Circuit City

The New York Times featured an interesting article by Adam Grant, a contributing Op-Ed writer entitled “Unless you are Oprah, ‘be yourself’ is terrible advice.” It sheds some new light on what individuals need to focus on to “erase the gap between what you firmly believe inside and what you reveal to the outside world”.

But doing this, being totally authentic and completely open and honest, has a downside and often a negative effect on advancing in the business world. Said another way, we really don’t want to know everything about the authentic you. There is much truth here for organizations, as well.

In the corporate branding world, professionals have been trying to mine the authentic “self” of an organization… that inner essence which needs to be brought forward to present a brand that is true and honest. While this is a strong starting point, as Mr. Grant points out for individuals, perhaps organizations don’t need to focus on all the warts and truths of their inner self, but define themselves to what they can credibly claim. “Rather than changing from the inside out, you bring the outside in”.

Corporations do need to understand the foundation of where they have come from, but build their brands based on reasonable aspirations of what they want to be. It is a fine line between aspiration and over-promise…and this task has to be very carefully approached. But in the end, if that seam can be found, great brands can be crafted.

The magic is in the synthesis. Understanding the reality of the past blended into a vision of the future.

To quote Grant… “they just want you to live up to what comes out of your mouth.” So spend meaningful time thinking about what that is, and then live it. Amen.

This past week has been a flurry of activity between Apple and the U.S. Justice Department about unlocking an iPhone used in the San Bernadino terrorist attack. It is a profound question, and not a new one. Apple’s response so far has been consistent with the brand bond it has with its loyalists… that the relationship with consumers takes precedence.

In the New York Times, Eric Lichtblau and Matt Apuzzo cite that Apple’s refusal “appears to be based on its concern for its business model and public brand marketing strategy” rather than a legal rationale. They are partially correct. Apple knows that it is in the “relationship” business… and will, at all costs, defend that relationship with its consumers.

In a recent post, we focused on “Why Authenticity Matters”. As we wrote, “Authentic brands do what they say. Their behavior is consistent with their promises”. Apple is being true and authentic to its very reason for being. In the face of the immediacy of a legal challenge, it has deferred to its brand before compromising.

There is no question that this issue is complex. From a technical and legal standpoint, opening up the code could set a significant precedent that could have broad impact across many companies with strong intellectual property as a basis for their differentiation. Imagine some people being poisoned by drinking Coca-Cola and the company being asked by the Justice Department to reveal it’s 130 year-old, secret formula for the purposes of helping in a criminal investigation. This example isn’t as emotionally loaded as dealing with a terrorist situation, but the precedent is similar.

On the other hand, any way the authorities can gather information to thwart terrorist activities is a good thing to do. So this becomes a thorny problem.

There is no question that Apple needs to find a way to help the Justice Department without compromising its bond with consumers. Reading between the lines, both Apple and the Justice Department have essentially acknowledged this. The question is how to provide this information while protecting the Apple brand. I am confident, once the bluster dies down, this will be accomplished.

One universal characteristic of market leaders and powerful brands is that they are authentic. Business leaders should challenge if they have embraced what authenticity means.

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Authentic brands do what they say. Their behavior is consistent with their promises. That means that the organization making the brand promise must be congruent: its business processes have to be designed and aligned to ensure behavior that supports and delivers the brand promise. So ‘brand’ goes way beyond communications or image. It is an organizational mandate.

There have been three recent examples of brands that have broken this trust. Volkswagen completely diluted its brand by not only installing software in cars to cheat on emissions standards, but also hiding and denying this behavior for years. They impeded and obstructed regulators and provided misleading information, and thus violated not only customer trust, but also employee affection for the company. It will take years for VW to recapture its market position.

Takata, a leading supplier of air-bags, tried to duck responsibility for airbags that can explode when deployed by implying that it was a data manipulation issue. The truth did come out, and after years of denial, Takata is now paying the price for misleading customers. Their brand has suffered immeasurably. To quote the lead plaintiff, “The only thing they did not know was the names of the individuals who were going to be injured or killed, and the date it was going to happen.” Ouch.

Chipotle did not appear to react fast enough when it learned about a Norovirus outbreak. Apparently, the procedure for “washing down” produce didn’t seem to be effective. They have subsequently apologized, closed some restaurants and put in place new procedures. The question is whether consumers will believe that they will continue to act in a truthful manner. We give them praise for not denying the problem, but time will tell whether consumers believe Chipotle acted fast enough in the best interest of their consumers. For a brand based on credibility, they are dancing very close to the edge.

One of the benefits of being authentic is word-of-mouth recommendations and repeat purchases. In other words… loyalty. Whether B2B or B2C, understanding what authentic means and living it every day is a mandate in today’s complex markets.

Brands are ultimately about meaning. Stories are the building blocks of meaning. And stories that connect your brand with a fundamental human need can help you build a powerful bond with your clients.

In our experience, this is as true for management consultants, accountants, law firms and architects as it is for carmakers, technology manufacturers, fashion designers and food brands. The difference is that while we have long accepted that emotional connection can drive consumer purchases, we like to think that business-to-business purchases are driven entirely by cold reason. They are not.

We have spent many years interviewing C-suite executives who purchase professional services. Sometimes one firm has a “silver bullet”, a tool or insight or method that nobody else has, so the choice is obvious. It happens, but it’s vanishingly rare (and quickly copied).

More often, clients have to choose between firms that have very similar offerings, people and approaches. So how do they pick? We have found that they make choices based on the story the brand tells them… the story that the brand allows them to tell about themselves.

Certain narrative patterns or storylines tend to recur within particular categories of professional services firms. The table below illustrates a few of the story patterns we often see in our work with these firms.

Credit: Archetypal story patterns based on Joseph Campbell’s The Hero With A Thousand Faces, and Carol Pearson’s The Hero And The Outlaw

Each of these narrative patterns enables a brand to evoke and address a deep human need, even when offering an abstraction such as professional advice. And each of these stories can be told in a multitude of different ways.

By understanding these patterns, a professional service firm can drive differentiation and preference.

So how do you discover and then develop your authentic brand story? There are strong clues in your firm’s origin story and in the recurring iconic stories about the firm that your professionals tell themselves. The stories that clients tell about you (and the language they use to tell them) are also powerful sources. In both cases, it takes skilled questioning and astute listening to draw out the truth in the tale.

Once you have discovered the fundamental brand story that reflects the truth of your organization, it can then be developed into compelling market-facing messages, woven through all your communications and crucially, embedded in the culture of the firm and the behavior of your people.

Mean Something If You Want To Matter

Any brand that endures and stands out from the pack does so by connecting with a fundamental human need.

Professional services firms, which deal with abstractions and intangibles, can begin to build and leverage this deep human connection by first understanding what they stand for – what they intend to mean to their clients and employees.

A powerful, authentic brand captures and signals the underlying human meaning in your business – the thing that sets you apart and makes you matter to your marketplace of potential clients and recruits.

Your brand is therefore a strategic business issue, way more profound than issues like name, logo, tagline, or visual style. Those are symbolic expressions of the brand, shortcuts to the meaning in the business: they are not the brand itself.

One of the key challenges for a professional services firm is how to encourage clients to have a committed relationship to the organization, not just to the individual consultant. Brand offers a way to do this, by building a shared sense of the meaning in the business, while at the same time enabling individual professionals to express that meaning in a way that is authentic to them.

Our experience helping professional services firms to differentiate and market themselves effectively has helped us identify three key factors that set professional services brands apart:

• Relationship is the envelope that wraps the client work. Professional services firms need to understand and leverage the emotional value of the client relationship as a key differentiator

• Attracting and developing talent is as important as attracting and developing clients. Aligning the internal and external brand is crucial
• Vision, values and beliefs drive the behaviors that convey the brand. Understanding and clarifying these areas is essential to building a meaningful professional services brand.

Take McKinsey and The Boston Consulting Group (BCG), the top two global strategy consulting firms. They each recruit similar people from the same set of elite schools, and they each address similar business challenges with similar intellectual tools. And yet clients see real differences and make choices between the two. How and why?

The answer lies in the meaning that both firms have built as they have developed their respective brands. McKinsey has come to mean power and control – the stability and order that enables prosperity. BCG on the other hand, has built its brand meaning around understanding and transformation – the insight that empowers you to change your circumstances for the better. Both are compelling meanings that speak to fundamental human needs, but each appeals to a different client mindset.

These two iconic consulting brands have used narrative and story to create meaning and differentiation as they compete for clients and talent. Our next post will explore how to use story as a tool to differentiate your firm, and to create meaning that attracts the right clients and the right recruits.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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The recent announcement about Disney raising admission prices at theme parks to over $100 per day points to an important benefit of very strong brands… they can price higher and maintain upwards momentum.

Brands that provide extraordinary quality and a unique experience have enormous leverage to price higher. Said another way, it is possible to raise prices without much of a consumer push-back.

Here’s the rub. In almost every category, where products are essentially at parity, marketers struggle to hold prices, especially when there is a competitor who is willing to cut price to hold on to or grow a franchise. Thus, particularly in highly competitive categories, marketers become hostage to a pricing spiral, and reluctant to take risks or invest. As someone once said, it’s hard to look outside of the swamp when alligators are nipping at you toes. [Read more →]