In this age of disruption, it’s too easy for many businesses to see themselves as if they are at a disadvantage–the phrase “legacy company” has almost come to imply “not that relevant.” Nothing could be further from the truth. Companies with strong brands can use them as levers of growth, driving powerful business transformations.
While established brands aren’t the problem, an outdated playbook is. Companies that are willing to modernize their approach to brand-building, understand the power and importance of brand purpose and clarify their portfolio and architecture systems aren’t just finding incremental improvements. By harnessing brand strength, they’re achieving uncommon growth–look at the stellar sales of such “old” companies as Disney, LEGO and Costco.
Many confront their outdated brand management approach only when faced with disruption, such as a new competitor or a merger, acquisition or divestiture. But companies can decide to establish a new direction for a brand–and build a story about the future–any time they want.
Modernizing brand strategy
Brand activism is on the rise and that means that with a modern approach, companies have more avenues than ever to win loyal customers. But doing so calls for permanently ditching the classical model of brand-building so many business leaders cut their teeth on: select a target, develop a positioning, launch a campaign, repeat. In those days, brands were built on communication.
Today, we know that’s not true. Brands are built on experiences. And in a modern company, all functions of an organization help deliver those experiences. That requires rethinking the role of brand in driving growth. It’s a complex time. On one hand, people’s trust in brands (along with their faith in government, their employers and the media) is declining. On the other, thanks to social media, brand engagement is on the rise, and brand activism has become a powerful force of change.
Modern brand-building embraces both truths, constantly working to build trust and increase engagement. And it understands that brands now function in intricate ecosystems. Samsung, for example, is a powerful brand in its own right. But its phones run on Android, it partners with AT&T and is sold at Best Buy. How should the brand appear in each context? What should that experience be like?
The power of purpose
Gaining trust means asking people to believe in you. Beyond selling your product and making money, what do you stand for? What are you doing to make the world a better place? How do you treat people–not just your customers, but your employees?
Once, these were considered soft questions. Today, purpose is a dollars-and-cents reality, key to hiring the best people and enabling them to do great things.
Purpose-driven companies provide employees with the tools and processes they need to activate that purpose–in the form of better experiences–to customers, prospects and stakeholders.
But most importantly, purpose becomes the brand lens, making every decision easier. When companies know which activations and efforts resonate best with their purpose, they hit more home runs. My favorite example is Nike because it’s so simple: If you have a body, you’re an athlete. That’s a belief system that influences everything Nike does, not just in shoe and clothing design but in expanding digital and store innovations.
We know it pays off. Purpose is a core component of brand relevance, something Prophet has been tracking for the last several years. And while consumer-facing companies get most of the headlines, purpose is even more critical in B2B enterprises. Companies like IBM, SAP and Google are winning their categories because customers know that they have a higher-order purpose and uniquely deliver on it through products, services, experiences, partnerships and communication.
The question of brand portfolio and architecture is growing in importance, and key to modernizing brands. Part of that is due to search: If brand architecture and sub-brands are unclear, Google punishes you in search results. Ideally, companies should have as many brands as needed to meet business goals, but as few as possible to maximize return on investment.
The problem of overly complex architecture and brand clutter most often surface during divestitures and M&A activity, but every company can benefit from periodic portfolio reviews, questioning the assumptions behind each decision.
The truth is that in many companies new brands for product launches and line extensions are overused, causing confusion and fragmentation. It’s especially true when companies have acquired brands over time, without thinking through a portfolio strategy. So the clutter lives on; new brands intensify the problem. But it also happens in companies that grew quickly, launching new brands and sub-brands with little thought to overall structure.
Portfolio pruning calls for tough questions. How many brands do we need to compete? How do we understand the trade-offs between driving demand and ROI? What is this brand’s contribution to the financial value of an organization? This work goes well beyond simple brand valuations. Companies need to know how much brand, and its perception and reputation, drives choice. That shapes decisions about where to invest.
Understanding the true value of brands helps companies tap them for their transformative power. They’re not just static assets on a balance sheet. They are living and breathing. Nurtured properly, they seed the future. Companies know they can leverage them not just to keep up with new and disruptive competitors, but cultivate them to achieve uncommon growth.