Brand Blow Out - brand management

Chief Executive, The, July, 2001

What is a brand? More importantly, who owns a brand? A company? Its customers? Or someone else altogether?

These are questions that more and more CEOs are asking themselves, as single missteps place brands--and the companies that rely upon them--at risk.

Once upon a time it was assumed that a brand resided primarily within a trademark or a logo, a graphic representation of accumulated goodwill among a company's customer base. A good product was essential--Coca-Cola's secret formula, for example--but the key was advertising. Spend enough on ads, marketers thought, and you can brand almost anything.

Eventually, marketers arrived at a more sophisticated understanding of the relationship between company, customer, and brand. It became fashionable to view a brand as a promise--a guarantee of a certain quality or aesthetic experience extended by a firm to its customers. In this view the brand was far more valuable--and far more fragile--than previously thought. Firms placed their brands at jeopardy every time they breached their implied contract with customer expectations.

Both views reflect a belief in brands as assets--items of value that must be managed for profitability and survival. Implicit is the assumption that these assets belong to the firms that created them and that still own the trademarks.

And yet recent experience suggests that brands may not belong to their nominal corporate owners at all, but to a firm's stakeholders--including customers, suppliers, and employees. Their collective opinion of a company creates the brand effect in the first place. In essence, these stakeholders license their goodwill and trust back to the brand-holding company, which then uses that license to create products, revenues, and profits. The company can enhance or diminish the terms of this unspoken license agreement with its performance, but the brand itself belongs to the stakeholders--who can revoke their brand license at will.

Consider Firestone and its 100-year-old brand, now at risk of cancellation not by its end customers-drivers--but by its major distributors, otherwise known as automakers. Ford's decision to recall 13 million additional tires because of safety concerns was quickly followed by announcements from General Motors and Nissan that they, too, would reduce their dependence on Firestone products. And while both automakers were careful to insist that their decisions were not solely related to Firestone's safety record, the unspoken message was clear: Firestone's brand is so badly damaged that it now places its partners' brands in danger. The Firestone name--once synonymous with performance--is now treated like a leper by its former stakeholders.

Of course, there are happier examples of this phenomenon, too. Michael Dell, Chief Executive's CEO of the Year (page 28), has transformed his four-letter surname into a symbol not just of quality computers and servers, but a catchphrase for innovative business and partnership structures. Dell's keen understanding of the collaborative nature of customer value-creation has resulted in a brand with deep support not just from customers, but from all its stakeholders--suppliers, employees, and shareholders alike. Their collective willingness to license their goodwill to Dell has resulted in a brand powerhouse--and a financial juggernaut.

For Firestone and Dell, a brand reflects not just the company itself, but the company it keeps.

How about your company?

JOHN BRANDT