Posts
Earlier this month I had breakfast with my old
friend Anne Bahr Thompson in New York. She is an exceptional thinker who used
to run the strategy practice at Interbrand.
Anne has invested the better part of the last
three years developing the notion of what she has trademarked as "BrandCitizenship".
Her contention is as powerful as it is simple.
The data
from three years of this research
suggests that in a world where paternalistic structures are increasingly
impotent, some brands seem to have the ability to command the respect
traditionally attributed to institutions like government, the judiciary and the
fourth estate. In other words, her work suggests that we are far more likely
today to believe what an Apple or a TATA were to say, than we would The Wall
Street Journal or even Mr Obama. As a corollary, Brand Citizenship seems to
suggest that brands and businesses that enjoy high "citizenship"
ratings ( BODYSHOP at one time) will
score highly on measures like disposition and leadership.
The last ten brand valuation clients I have been
involved with, represent a little over $ 25 billion in market capitalization,
across diverse categories like media, travel, food products, chemicals,
financial services and speciality retail. It is indeed telling that on average,
just under a quarter of the value of these businesses lies in their corporate
reputation alone ( traditionally grey stuff like ethics, transparency, governance
and community participation). In simple terms, a fourth of the economic profit
generated by these firms is a direct result of the way people think about the
company (as against the delivery of their products or services)
All this then begs the question of what
investors( both institutional and retail) might look for in their investments.
For my money, in the not so distant
future, the focus of due diligence and disclosure will shift from the financial
statements to the strength and character of your reputation.
Think about it: would you put serious money as
easily into an opaque high performer as you would into a committed leadership
with a transparent long term focus.
Why are we more excited about new friends but
always lean on old friends. Is it because old friends have generally been more
dependent at crunch time. Anne's thesis
is that there is a certain dependability to businesses that demonstrate
high citizenship values. As such, we tend to look up to them (leadership) as
well lean on them( disposition)
Now if Brand Citizenship can drive up a brand's
leadership and disposition metrics with its customers, thereby accelerating
demand, then it just makes sense to manage and measure it by design. In my view, the most effective way to achieve
this is to encrypt the idea of Brand Citizenship into a firm's performance metrics. It is then possible to
create a real cause and effect relationship between business performance and
brand citizenship.
In overcrowded, transactional markets of the
kind that we mostly operate in, I can't
think of a better way to build demand resilience and hence lower forecast risk.
Tell me what you think.
