Earning success: what is your brand's value?
I have a love of world records. Not the Guinness variety but of the hard-won, life-time-of-hard-work kind. From Nobels to Archibalds, from Grands Prix to Olympic records; they show us what we are capable of at the ultimate point of clarity, commitment and sacrifice.
I was thinking about this watching the COP26 talks in Glasgow. There is no doubt progress was made but, certainly, no records were broken (beyond likely another hottest year in history). My scorecard would be: Clarity gets a big tick as no one was arguing the science; Commitment gets a pass mark, as all nations have committed to transparency, deforestation targets and to come back to the table again next year for more; and Sacrifice, well… poor old sacrifice is very much a WIP.
It’s hard to break habits and our world is still very much in the throes of an addiction to fossil fuels and cheap money. It’s a start, but as any pilot will tell you, it’s better to control getting airborne as early as you can on a runway before you run out of tarmac and have to start making less optimal choices.
In my home state of Victoria, we are also in the process of resetting after our own dalliance with unwanted world titles. While it’s a dubious title that will get some play on our agony aunt radio stations, it's not really accurate. I am sure Medieval Europeans would be laughing at our fourteen months of Covid lockdown like a scene from a Monty Python skit, ‘Fourteen months, bah that’s luxury, try eight years for the plague!’
The search for meaning
As with anything it is the way we have gotten here and the habits we have picked up along the way of which we have to be careful. We have perhaps become too used to a life of bubbles, zoom, daily politico, postponement and delay. If we are going to get back to the promise of our state’s license plate (The Education State, rather than The Lockdown State) we have some work to do and some habits to break.
During a pandemic, bad habits are exposed. How organised vs disorganised are you? How much agency vs ability to surrender do you have? Do you follow or reinterpret rules? Certainly, inside our team, it has shown we have people all over this spectrum but as we return to normal our culture will have to reset as the business and its people turn from the empathy required to survive a health emergency to a focus on the skills needed to thrive in the digital age.
To avoid becoming static there is a concept in performance training and organisational theory called plateauing. It is where you reach a point where you cease to see exponential or incremental gains through the way you work or the strategy you pursue. You don’t necessarily go backwards but you don’t move forwards either. Stasis sets in and while physically you may perform at the same level, your mental game drops away as the link between your muscles and your mind becomes static, fixed and over time your performance moves from plateau into decline. Businesses face the same challenge as they also plateau without review and resetting.
Where are we playing and how will we win?
We have been digging into this as part of our upcoming 'Brand in the Boardroom' special (stay tuned) and it formed a large part of our 'In Conversation With' webinar with Brent Smart (you can watch it here). Avoiding a plateau is done through planning; strategic or otherwise. The great ones use the planning or review process to shed their skin (think Foxtel via kayo and Binge or Qantas Group with Jetstar) vs those that underperform, that use it as a process to justify the status quo (think Westpac being still a house of brands, A2 milk focusing on B2C rather than B2B or AGL’s lack of separation between new energy and old energy). While the process is the same the questions asked tend to be very different.
One of my favourite Canadians, Prof Roger Martin, ex Dean of Toronto’s Rotman School of Management, made an easy-to-understand strategy framework. Rather than promote a view based on complexity, he focused on a few key choices that any strategy must address: it must define the field of play, it must define what success looks like and it must define how the organisation will win.
The most important question to answer is what must be true for us to win. This is the basis of value creation and brand is the tool that allows you to capture it. It is also the key part in communicating the value of brand inside the organisation. I am still astounded most weeks to hear brand explained as ‘everything’ where it is really a way to make your strategic choices explicit. Externally, it showcases how you have chosen to position to capture value and internally it explains to those higher up why you are making the choices you are. And bonus points go to those who go beyond focusing on the customer to focusing on what you can uniquely offer the customer to get them to give you their money, which ultimately is the only proof point that your strategy is working.
Communicating brand ‘up’ the chain
While everyone does and should have an opinion on the emotive way a brand comes to life through how it is developed, how it is described and how it is designed, explaining brand up the food chain really comes down to three key concepts: value creation, value alignment and value management.
Value creation: Value is defined as the perceived benefit to the customer and best thought of as the utility of your product, service or experience. Offering something of use alone is not sufficient. You have to be able to charge enough to cover costs and generate return. This is the role of brand. To help identify and develop enough differentiation to command a margin over costs. Consider Tesla. Its gross margin last quarter rose from 27.7% to a record-high 30.5%, meaning Tesla earned a profit of around US$25,000 for every roughly US$90,000 vehicle it sold. Its margin is equivalent to a luxury car maker like Ferrari but is doing the volume of Toyota.
Value alignment: Value is easily destroyed, and the biggest culprit is internal misalignment. This can happen on many levels, from different beliefs on right and wrong to different ways you try and meet the expectations of consumers. While you might not like their burgers consider McDonald’s. Their internal alignment allows them to serve over 70 million customers every day in a consistent manner. They have scalable processes, routines, and a working culture that delivers standardised products sold at a repeatable volume.
Value management: Building and maintaining a strong brand calls for the entire organisation to be brand-oriented. It’s easier to build a brand than it is to manage one over time. For every Shopify that has managed to continuously modify, there is a Kodak who failed to keep up. Consider Cadbury. Born in 1904 Cadbury Dairy Milk perfected the rich and creamy milk chocolate recipe. Cadbury has never stood still, and actively manages its brand to respond to changing consumer behaviour. If you consider its entire worldwide portfolio, Cadbury has one master brand but over fifty chocolate sub-brands (Joe math) and multiple different types of desserts, beverages, biscuits and cooking products.
As our world begins to move into a period of inflation driven by energy transformation and a midlife crisis of the digital age, businesses must stick to the value developing habits that only great brand management can provide to successfully weather the storm.
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Be better to each other.
