Private Equity and Venture Capitalists: The New Brand Champions
"Vulture in Tree" by Howard Ignatius via Flickr
Branding is a fascinating phenomenon because it's the ultimate social experiment. I see it as a sociologist and as a marketer so look at two angles at once:
- An internal effort to create the ideal corporate culture for the desired kind of productivity
- An external effort to create the ideal image for customer loyalty at a premium price
In the U.S. at least, modern branding - that is, branding that goes beyond the external image-building side - can be traced roughly back to four publications all released approximately at the turn of the 21st century:
- "The Brand Called You," Fast Company, 1997: Brands are not just for products anymore, they are for people - and your career depends on you being the CEO of your own personal brand.
- The Cluetrain Manifesto, 1999: "Markets Are Conversations and "The Hyperlinked Organization": Powered by the Internet and social media, conversations between people are subverting the traditional, hierarchical, one-way model of communication. The powers that be no longer control the conversation - inside the organization or outside it.
- "The Power of the Fifth P," Gallup Management Journal, 2001: Argued that people - one's employees - are as important to marketing success as the other four classic "P's" (Product, Place, Promotion and Price)
- "Are The Strategic Stars Aligned For Your Corporate Brand," Harvard Business Review, 2001: Argued that branding is a business tool aligning strategy, operations, management and image-building
The problem is that such attempts are still unsuccessful.
Although there is wide acceptance that brands are important to business success, misperceptions persist, such as:
- Branding = marketing, advertising, logo, tagline
- Brand = "What I say" and social media is "dangerous"
- Brand = temporary campaign, instant gratification, something I can buy
It sets up the problem neatly:
"While few would dispute the value of branding, in a business dominated by the bottom line, off-balance-sheet considerations are often treated as afterthoughts--secondary undertakings undertaken only after the critical initial decision to invest is made."In a capitalist society, if you want to know what people value, follow the money.
A great illustration of this principle happens in the movie The Devil Wears Prada. The heroine and her boyfriend argue over her job, and how it has taken over her life. She interrupts the argument to take a call from her boss, at which point he says:
"In case you were wondering - the person whose calls you always take? That's the relationship you're in. I hope you two are very happy together."Similarly, if branding is to happen from the inception of the business, in a comprehensive way, it has to be championed by those who control the purse strings - and often those people are venture capitalists.
The way to champion branding, suggests the article, is for VC firms to hire branding experts full-time -just like any other in-house expert - "from biochemists to tech specialists--to help them not only maximize their investment but also to identify potential targets."
If this hasn't happened yet, the article suggests, it's because:
- Misconceptions of what branding is (see above) and therefore "bringing on agencies after the fact to address specific branding-related concerns" because "they think of branding as something to be attacked piecemeal."
- Misconceptions that branding is not a real area of expertise, and therefore "branding is a discipline that everyone thinks him or herself an expert in."
From a practical point of view, these two misconceptions are incredibly costly. Companies leave untold billions on the table because they make these mistakes. Just over the past couple of years I've predicted things that any highly attuned brand expert could tell you:
- Google+ would fail to overtake Facebook because Google does not own the "friendship" brand and because of the perception that they are starting to dominate everything
- Rock of Ages would flop because people are turned off by Tom Cruise's incessant egomania and he needs to play against type
- Facebook needed to recover its brand by leveraging "friendship" inside the business - and Microsoft needed to reinvent itself as "cool" by partnering with Facebook in this way and providing the "trusted business" attribute - an opportunity that Microsoft has seized upon with its $1.2 billion acquisition of Yammer
- The Kardashians line at Sears was a total brand misfire, because junky clothes from trashy people is not the source of their value; a window into the dramatic life of family-oriented Hollywood exhibitionists is (thus the $40 million contract from E! even after Kim's wedding disaster)
- Starbucks is becoming a tired brand and should kill itself off, and reinvent itself, before the market takes care of that.
Yesterday a career expert told my daughter, "The way to succeed is to be who YOU are, and move forward with YOUR unique talent." Similarly, the way for a brand to succeed is to be authentic, and to move forward with providing solutions within its area of expertise that customers want.
The problem is that normally, people inside the organization can't see what its real competency is, and people outside the organization are either not skilled enough or engaged enough, or not engaged at the right time, to provide it with the right guidance.
In the end, branding is really nothing more than an extraordinary level of self-consciousness - the ability to know who you are, know what the market wants, and find a match between the two. Private equity and venture capital firms ought to take advantage of that, and so should the rest of us.