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Private Equity and Venture Capitalists: The New Brand Champions

Vulture in Tree
"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:
Over the past decade or so people have gradually come to accept the incredible importance of branding to the value of the organization and an entire sub-industry has arisen around the attempt to quantify this.

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
I believe that yet another Fast Company article, recently published, may change all of this. It's called "The Next Phase of VC Strategy: Bringing Branding Into The Earliest  Phases."

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:

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.

Good luck!



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