Brand: The New Business Leadership

Millward Brown: Point of View
Brand: The New Business Leadership
The successful creation and management of brands will be the hallmark of business
leadership in the 21st century. Does that sound bold?
Perhaps, but the world today is far different from what it was only a couple of decades
ago, and these structural changes have placed brands at the forefront of business success.
A review of stocks in the S&P index shows that businesses that own the strongest brands
perform significantly better than other businesses.
Mario Simon
Managing Director, Americas
Millward Brown Optimor
[email protected]
www.millwardbrown.com
Business leadership and brand leadership have become inextricably linked, and a study by
Millward Brown Optimor highlights the shift that has taken place. The analysis found that
in 1980, virtually the entire value of an average S&P 500 company consisted of tangible
assets (chairs, factories, inventory, etc.). Now, in 2010, tangible assets account for only 30
to 40 percent of a company’s value. The rest is intangible value, and about half of that
intangible portion — close to 30 percent of total business value — is attributed to brand.
Therefore, it is not a stretch to say that for many companies, brand is their single biggest
asset. What has led to this change in what matters to business success?
BrandZ TM Top 100 Portfolio Performance vs. S&P 500
(as of April 16 2010)
60% 50% 40% <r=n>?@ ABp 100 PBrDBEFB S&P 500 30% 20% 18.5%
10% 0% Apr 06 Jun 06 Aug 06 Oct 06 Dec 06 Feb 07 Apr 07 Jun 07 Aug 07 Oct 07 Dec 07 Feb 08 Apr 08 Jun 08 Aug 08 Oct 08 Dec 08 Feb 09 Apr 09 Jun 09 Aug 09 Oct 09 Dec 09 Feb 10 Apr 10 -­‐10% -11.5%
-­‐20% -­‐30% -­‐40% -­‐50% Portfolio signifies strong brands in BrandZ as measured by brand contribution to shareholder value
Millward Brown: Point of View Brand: The New Business Leadership
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to help add a higher order of meaning and fulfillment, not only
to purchase decisions but also to the lives of consumers.
Why Brand Is Driving Business Leadership
The technological advances of the 20th century generated
more prosperity than ever existed before. Consumers in
developed markets came to have almost limitless choices in
nearly every category, including many new categories that
were created as companies innovated into new spaces.
As people find their basic consumption needs
satisfied, brands are uniquely positioned to help
add a higher order of meaning and fulfillment, not
only to purchase decisions but also to the lives of
consumers.
Abundance and prosperity have allowed companies to
redefine what consumers “need.” Yet wealth hasn’t necessarily
made us much happier. As Daniel Pink writes in A Whole New
Mind, “The paradox of prosperity is that while living standards
have risen steadily decade after decade, personal, family and
life satisfaction haven’t budged. That’s why more people —
liberated by prosperity but not fulfilled by it — are resolving
the paradox by searching for meaning.” This quest for meaning
has huge implications for brands. As people find their basic
consumption needs satisfied, brands are uniquely positioned
©2010 Millward Brown
What used to be sufficient for a company’s success — an
excellent product and superior execution of service delivery
— are now merely table stakes. As consumers focus on
higher meaning in making brand choices, companies have
a unique opportunity to reinvent themselves through their
brands. Unlike products, brands are impossible to imitate. In
fact, by one definition, a brand is the unique place occupied in
the customer’s mind by a product or service. Therefore, when
a brand has carved out a unique position in people’s minds
and enjoys a strong connection with its customer base, it has
created the ultimate source of differentiation and therefore
competitive advantage. Visionary business leaders have
anticipated this and have carefully invested in their brands,
making them the cornerstones of their business strategies. It
is not necessarily the amount of investment behind the brand
that has made the difference, but the fundamental principles
these leaders have followed. This gives rise to the question:
How have brands driven business success?
The Rise of the Brand Ideal
As previously discussed, prosperity has enabled an everincreasing number of people to satisfy their basic needs. With
essentials taken care of, these people have turned to a search
for higher meaning. Brands have the unique ability to tap into
this pursuit for meaning, because both brand and meaning
are intangibles. Both operate on the same plane of human
existence and consciousness. So which brands will be most
successful at connecting with their customers? A simple look
at the brands that have created the most value over time can
provide clues to the answer.
According to the “BrandZ Top100 Most Powerful Brands” study,
published annually in the Financial Times, the three largest
brands today are Google, IBM, and Apple. What do they have
in common? Although all three can be generally described
as technology companies, they are wildly different in terms of
their business models, their products, and their customers. Yet
all three are at the top of the list. I argue that what sets these
Millward Brown: Point of View Brand: The New Business Leadership
The brands that have created the largest connection
with their audiences are those that stand for true
ideals.
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Creating the Brand Ideal
To create a brand ideal, a company must identify a higher
calling than simply selling its product. This ideal drives
innovation and inspiration, enhances recognition, and unifies
brands apart from their competitors is an orientation toward the organization in delivering against it. It not only informs
a brand ideal. Since its inception, Google has single-mindedly business strategy; in a very essential way it is the business
focused on the ideal of liberating people through the universal strategy.
availability of information. IBM has taken on the task of helping
to create a smarter planet, and Apple has invited people to Brand ideals are not proprietary to large brands. One of my
create their world through self-expression, to “think different.”
favorite examples of a smaller brand that has successfully
applied an authentic brand ideal is Method. Method surprised
Therefore, the brands that have created the largest connection consumers by bringing design and emotion into the mundane
with their audiences (and the largest value for their companies) category of home cleaning products. Its brand ideal, to inspire
are those that stand for true ideals, because true ideals directly a healthy, happy home, created the aspirational lifestyle of
tap into people’s quest for meaning.
a “Method home.” Method built a culture that reflects its
values, as suggested by the slogan “People against dirty,”
Jim Stengel, formerly the global marketing officer of Procter and engaged its advocates in exciting and inclusive ways.
& Gamble and arguably today’s most influential marketer, The result has been Method’s astonishing growth into a $100
is propagating the movement of “Brand Ideal” as the way to million company in only seven years.
explain the role of brands in driving business leadership. He
identifies the conceptual elements of the brand ideal, noting, Indeed, brand ideals, when executed authentically, drive
“A brand ideal is a higher-order benefit that a brand gives to business success. A shocking 87 percent of consumers say
the world that actively improves the quality of people’s lives and they are likely to switch to a brand that is associated with a
creates a meaningful goal for the brand that aligns employees higher purpose. While many companies have focused on
and the organization to better serve customers.”
cause marketing or corporate social responsibility (CSR),
humanitarian goals are neither a prerequisite nor a sufficient
To create a brand ideal, a company must identify
a higher calling than simply selling its product.
The ideal not only informs the business strategy;
in a very essential way it is the business strategy.
condition for a brand to have an ideal. The ideal needs to
serve and make reference to universal human truth, but that
truth does not always have to be connected to a social value.
For example, Red Bull has developed a business worth
$4.4 billion based on a brand ideal that does not have a
humanitarian bent. Red Bull created a category by serving the
individual ideal of energy and freedom and by empowering
people to lift their bodies and spirits. Red Bull’s example also
illustrates how a brand ideal differs from CSR and cause
©2010 Millward Brown
Millward Brown: Point of View Brand: The New Business Leadership
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When a company is organized around its brand
ideal, it allows the brand to show up in the world
with intentionality and a purpose that are instantly
apparent.
This has a tremendous impact on an organization’s
alignment as well as the behavior, satisfaction, and retention
of its employees. When a company is organized around its
brand ideal, it allows the brand to show up in the world with
intentionality and a purpose that are instantly apparent.
marketing. The ideal of energy and freedom is not a “project”
that the brand undertook. It is not a marketing initiative to
fulfill the company’s responsibility to society. Red Bull’s brand
ideal is what the company does. From the way its offices are
designed (with ramps so employees can skateboard from floor
Starbucks was such a brand a few years ago. Starbucks’ brand
ideal, to help create human connections, was delivered through
its management and operating practices. The brand didn’t
advertise, but motivated its employees to create a unique and
memorable customer experience, thus allowing Starbucks to
become a “third place” (after home and workplace) where
people could connect with one another.
Here To Stay
So is the importance of brand and brand ideals a permanent
structural shift in the way we conduct our economic lives, or is it
a transitory phenomenon? The answer to this question can be
found in the very roots of this shift from product to purpose. As
long as global output expands through technological advances
and prosperity reaches a larger number of consumers, brands
and brand ideals will not only drive business success, but their
importance will continue to increase. Therefore, the businesses
that make it their priority to organize around a higher purpose
will continue to be the leaders of the 21st century.
to floor), to the kinds of people it hires, to every participatory
event it organizes (such as the Red Bull Air Race World
Championship and the Red Bull Storm Chase), to every piece
of communication it transmits, Red Bull “gives you wings.”
To read more about brands and business leadership, visit our blog at www.mb-blog.com.
If you liked “Brands: The New Business of Leadership,” you might also be interested in:
What Price a Strong Brand?
Organizing Behind the Brand Ideal
The Keys to Brand Success
The ultimate test of the authenticity of a brand ideal lies in
the degree to which it permeates the business and provides
a compass for everything the company does. As Stengel says,
the brand ideal serves as an internal organizing principle.
The Business of Brands
©2010 Millward Brown
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