RITA CLIFTON
VIEWPOINT
Surviving Enron: the real
value of branding
Recent
corporate
scandals have
prompted
no little
soul-searching
in the business
community.
RITA CLIFTON
prefers a wry
smile
HOW SHOULD one react to the
current climate of exposés, moral
outrage and requests for honesty in
big business practice?
Should we laugh, cry, cheer, shrug? Overall, I
think I favour a wry smile on the surface, with a
steady determination to feel optimistic underneath.
A wry smile because so many prevailing attitudes
in the business world have conspired to
bring us to this point. Despite all the ethical
rhetoric, the compelling business case for ‘double
bottom lines’ and the recognition of the
need for broader measures of national wellbeing
(illustrated by such examples as the government’s
‘quality of life’ indicators), people running
quoted businesses will in the end focus on
what they are really measured and rewarded by:
profit and shareholder return. Not a problem in
itself, but if they can’t generate fast and big
enough results by the sustainable route (i.e. customer
loyalty, innovation and organic growth),
there is a strong temptation to engineer the
numbers to get those results.
As a business nation we have even, perhaps
unwittingly, tended to encourage this problem.
It starts from the top. Despite being interested
in broader indicators, the government is proudest
of economic growth and GDP. The management
route to the top of so many companies is
accounting and financial, rather than through
business generation and marketing skills. We
value the technical expertise of financial and
legal advisers (and encourage the propagation of
their impenetrable ‘internal language’) over and
above creative industries, and way in excess of
those in public duty.
A wry smile also seems appropriate in view of
the sensational treatment by some parts of the
media of the latest corporate accounting scandals
and its similarity with the lampooning of
new corporate names and corporate identities
over the past couple of years. The extent of the
accounting issue dwarfs ‘rebranding’ exercises in
financial terms, even using the mischievously
inflated figures quoted for name changes in the
press. A major renaming project would have several
noughts after the decimal point in percentage
comparison with Enron’s ‘missing’ billions .
I am not going to be an apologist for bad
decisions and poor business timing on the introduction
of new corporate names. Rather, I will
emphasise that good and real ‘brand’ activity
generates real (as opposed to manipulated) value
for customers. It is unfortunate that name
changes and superficial cosmetic packaging exercises
have been termed ‘rebranding’ in media
coverage. As anyone in a good business knows,
branding should be the central organising principle
to give a business the strongest sustainable
competitive advantage throughout everything it
does – from the particular way quality products
are developed, to a unique style of customer
service, to distinctive communication and to
corporate behaviour in the round.
This good brand practice has little to do with
desperate ‘rebadging’ exercises, which will never
make a bad or confused business better.
A good brand is not only the most valuable
and sustainable corporate asset, it is also the best
protection investors and the community at large
can have against corporate malpractice, as well
as the pressure point for positive change. Again,
if the brand is a company’s most important and
enduring economic asset, any company in its
right mind is going to want to maintain and
build that asset. If that is the carrot, then the
stick is seeing how worthless the once proud
names of Andersen and Enron have become.
Ironically, all this is a source of optimism.
Shocks to the business and human system have a
habit of reminding us of basic truths. The most
reliable way of making money legally is by
building a brand and corporate reputation that
meet and exceed their audiences’ demands. The
quickest way to destroy this money is to destroy
brand trust. In an all-seeing digital world, and in
a word-processed media environment where the
ghosts of past mistakes are never laid to rest,
there is no long term hiding place – real or virtual
– for corporate wrongdoing any more.
The mention of ‘media environment’ gives a
last excuse for a wry smile. Media brands face
great financial strains at the moment, and the
pressure to sell newspapers, airtime and channels
of all kinds is intense. Who is going to
guard The Guardian and its media colleagues?
The rather maligned, but ultimately the hero of
the piece, brand itself, and the reputation that it
needs to protect with its own stakeholders. ❦
2 Market Leader Autumn 2002
Rita Clifton is Chair of Interbrand |
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