|
Protecting
and Enhancing the Intangible
By Michael Alan Hamlin
July 15, 2002
Lots of intangibles are considered a corporation's most important assets according to contemporary management mythology. I mean thinking. The obvious intangible is the creativity of the organization's people. Industry leaders expertly benchmark efficiency, productivity, and quality with the effect that their relative contributions to competitive advantage is thin. Instead, competitive distinctiveness is a product of creativity. That creativity can take the form, for example, of the business model, the design of a product or service, or the way the product or service is delivered.
However creativity is applied in tangible ways, creativity itself remains intangible. You can feel it much like you feel the wind, but you can't touch it, you can't hold it, and you can't lock it up. You can, however, nurture it.
Brand equity is also intangible. It's always been hard to value, and instead of getting easier, it's getting harder. It's getting harder because brand equity, unlike hard resources like a factory, can suddenly disappear. Even in a downturn, hard assets can generally be sold at some price. But what, do you think, is the value of Enron's brand equity today? Of Arthur Andersen's?
That's not why Ian Batey complains that, "company boards give nine times more attention to counting and spending cash flow than worrying about where it comes from." That statistic, employed by Batey in the new book I began talking about last week, comes from a 30-month British research project conducted sometime in the 1990s. But before I go further, the name of the book is, Asian Branding: A Great Way to Fly (My apologies for not mentioning this somewhat important detail last week.).
According to Batey, London Business School senior fellow Tim Ambler "describes brand equity as the upstream reservoir of cash flow." Being upstream, of course, means that it doesn't show up on the bottom line. At least yet. As a result, few boards spend much time thinking about their brands. Instead, their concern, Batey argues, is principally bean counting. While there is concern with respect to how the company intends to sustain the supply of beans, the intrinsic difficulty humans have dealing with intangibles results in brand neglect.
Yet, "the very fact that brand equity is intangible makes the job of protecting and enhancing it that much harder," Batey cautions. Unfortunately, brand neglect at the board level is frequently mirrored elsewhere in the organization. As a result, much more often than not, organizations have no one - let alone the board - in charge of the brand. If someone - or something - is in charge it's often a middle level executive or team with little real authority to protect and nurture the brand.
One of the best models for brand management is business management teams. Championed by P&G, Batey says that barriers to brand development are non-existent because the teams are composed of top-line executives. "Their task is to define global brand identity and positioning, encouraging local markets to test and adopt the advertising that will serve the market best."
But a better model is the brand champion, Batey's favorite. For the brand champion to have real authority, he must have real authority. Which is why he's typically the CEO. Companies like Nike or Nestlé are palpably reverent towards their brands, and require top executives with as much a passion for marketing and brand building as they have for organizational and supply chain elegance.
The CEO as brand champion is a powerful brand building model because, "he will be able to devote his full organizational power to the task of nurturing the brand assets. He has full authority to veto advertising that doesn't comply with the brand's DNA. He approves brand stretching. He traditionally carries the respect of everyone in the company."
Batey doesn't have quite as lofty feelings for a couple of other models. For example, he says that the global brand director model is "primarily a case of 'two wrongs don't make a right.'" This model is typically found in organizations with top notch operations, financial, and systems people at the top. Since they don't understand brands, they appoint some "commercial person" to be brand guardian. But when guarding the brand appears to impinge on operations, financial, and systems prerogatives, guess which urgent need wins?
The global brand team makes the problem even worse, or so says Batey. Instead of just one relatively un-empowered brand guardian, the brand is surrounded by a group of corporate eunuchs. In theory, each team member represents a different region or market, and is a top-notch executive. But too frequently in reality, even if the company is fortunate enough to have truly talented people sitting on the team, it will only prosper if its leader "drives the team like Attila the Hun." Without strong leadership, it becomes another brand-threatening bureaucracy.
Of course, the worst model is no model at all. Which do you employ?
(Michael Alan Hamlin is the managing director of consultancy TeamAsia
and the author of three books on Asian economies and companies.
His latest book is Marketing Asian Places, of which he is co-author.
His e-mail address is mahamlin@teamasia.com)
|
