Steve McKee
Of all the assets any company owns, its brand is the single
most valuable.
A bold statement? Sure. But think about it: A brand is the
only corporate asset that, managed properly, will never
depreciate. Never depreciate. Those are magic words.
Patents expire, software ages, buildings crumble, roofs leak,
machines break, and trucks wear out. But a well-managed
brand can increase in value year after year.
Despite this unique characteristic, branding has long been
misunderstood. It seems soft and fuzzy. It’s often incorrectly
defined. And (at least historically) it hasn’t been a hard,
measurable internal metric like sales, market share, stock
price, or price/earnings ratio that can be tracked on a
spreadsheet or reported to the board. But neglecting a brand
is both naive and shortsighted for any company.
In some ways branding is a victim of semantics; call it
“reputation” and nobody in management would ever argue
that it’s anything less than critical. All companies are careful
to avoid doing anything that would harm their reputations,
intuitively understanding Will Rogers’s quip: “It takes a
lifetime to build a good reputation, but you can lose it in a
minute.” But management teams commonly underachieve in
the application of reputation management best practices—in
a word, branding.
Too many business leaders believe branding is a discipline
that lives in the marketing department. But it’s much broader
than that; branding includes everything a company does,
from the logo on its letterhead, to the way it handles customer
complaints, to whether its uniformed personnel keep their
shirts tucked in. It’s easy to limit your perspective of branding
to the verbal and visual expressions your company puts into
the marketplace, but there isn’t anything that anybody within
your organization does (or fails to do) that doesn’t affect at
some level how your brand is perceived. Company leaders
who ignore this do so at their peril.
Let me illustrate with a couple of examples. Not long ago
I purchased a fountain drink at a convenience store that
featured a pithy slogan on the cup: We always treat you like
royalty. I’m sure the people who came up with that line had
the best of intentions, but the clerks charged with carrying it
out didn’t get the message. The unkempt counter and sticky
floor made that c lear.
Similarly, a few years ago in the midst of the Great
Recession, a full-page newspaper ad from Citibank caught
my eye. Considering the mess-of-its-own-making from
which the bank was suffering, the ad featured an unusual
headline: “Providing Stability. Securing the Future.” Clearly, I
thought, someone in the marketing department is not paying
attention. Citi was not only being buffeted by the storm, it
was one of the causes of it. A company whose actions had
led to so much financial upheaval laying claim to stability
seemed detached at best, disingenuous at worst. (Ironically,
the ad also featured the bank’s longstanding slogan “Citi
never sleeps,” which, given the mess the company was in, I
surmised was truer than ever.)
Contrast that with an encounter a colleague recently had
when she purchased a new pair of shoes from a local running
store. Not only did she enjoy shopping there, a few days
later she received a call from a pleasant customer-service
representative who wanted to ensure everything was still ok.
That impressed her. Shortly thereafter, the store, unprompted,
delivered a gym bag to her as a thank-you for her business.
Needless to say, she now considers herself “in the club” and
is telling everyone she knows about it. And there wasn’t an
ad or website in the mix.
Branding is anything but lightweight, but too few companies
intentionally manage their brands as the valuable assets they
are. Effective branding improves the visibility of and respect
for a product, service, or company. It attracts attention and
drives sales. It also enhances margins, as customers are
willing to pay more for products and services from companies
they know and trust. Branding can also improve the internal
dynamics of an organization and influence both recruiting
and employee turnover. And research now demonstrates that
branding even affects financial metrics.
It’s easy to think about branding just in terms of the
latest-and-greatest social media platform, viral video, or
smartphone app. Doing so means missing the fundamental,
timeless principles of the discipline that go well beyond the
trendy and transient. It’s not like mathematics, engineering,
or accounting, in which there are rules to be followed or
regulations to be adhered to, but there are a significant
number of commonsense, sometimes-counterintuitive truths
based on how real humans interact in the real world that can
make a significant impact on any business.