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Building Business by Building A Masterbrand

By Lynn B. Upshaw and Earl L. Taylor, Ph.D

During much of the twentieth century, many product brands operated more as icons of awareness and accumulators of name and slogan recall than as sophisticated marketing instruments. Even after the creation of the brand management system at Procter & Gamble in the early 1930s, brands were often not draped in a particularly rich strategic tapestry, although some (such as Coca-Cola, Kodak, and Shell) successfully nurtured a strong cultural heritage.

Eventually, brands evolved to more complex vessels of strategic meaning that captured market share with prescient positionings and irresistible persona. Oddly enough, one of the most celebrated of such victories (not once, but twice) involved a German export with questionable heritage, first sold into the US during the 1960s, then successfully reprised three decades later. Beyond its physical benefits, the Volkswagen Beetle came to represent simplicity, freedom of expression and anti-establishment sentiments during the Vietnam War era. Apple Macintosh at its introduction in 1984 pulled off a similar positioning coup, this time against the mythic, but monolithic IBM . Soon, we were witnessing the ascension (and occasional stumbling) of such strategically cultivated world brands as Visa, McDonald’s, British Airways, Nike, Absolut, Heineken, Disney and Honda, to name just a few.

More recently, the concept of brand is being routinely, yet urgently elevated beyond the marketing department and driven throughout the sponsoring company as a central management discipline. This latest and broadest template of brand building has its roots in organizational branding, but carries a deeper, more populist dimension, resounding in the increasingly common call to “live the brand.” Such a rallying cry clearly is the hallmark of the company-wide, company-experienced, company-driven brand. Or, to be more accurate, the brand-driven company. 1 Your authors have come to call this development a “masterbrand”, a rarely used term which we believe reflects the scope and dominance that an enterprise-wide brand rightly encompasses. 2

THE MASTERBRAND REMASTERED

In our lexicon, a masterbrand is a central set of associated meanings and benefits, whose orbit stretches from the company’s strategic core, throughout its people and partners, enveloping its customers, and outward to its far perimeters of influence. Masterbrands enact the continuously evolving positioning of a company among its competitors, as well as the corporate persona that makes the company uniquely attractive to its constituencies. One of its key advantages is that a masterbrand may incorporate the company vision or mission or values, but translates them into more concrete, saleable forms.

At Charles Schwab, IKEA, Nokia, Starbucks, and McDonald’s, for example, the concept of masterbrand and company are inextricably intertwined. Even so-called holding companies such as Enron, diversified corporations such as Sara Lee Corp., product-focused companies like Procter & Gamble, and historically decentralized companies such as Hewlett-Packard – all are increasingly gravitating toward configurations that resemble single-brand-driven enterprises, within which individual product and service brands may be marketed.

Masterbrands have been created amid any number of varied circumstances, some of which have influenced how they operate as they mature. For example:

  • Some masterbrands are born and bred, often midwifed by a founder or founders who are out to create something unique in both brand and organization. Examples include the Saturn automobile brand (before it was pulled back under the GM canopy), Nike, Sony, FedEx, Virgin Group, and – long before those firms were founded – Johnson & Johnson and Coca-Cola.
  • Another group of masterbrands might be called born again, in that they are companies that created a franchise through more traditional methods, then their management identified in mid-game the opportunity to breathe new life into their enterprises by more aggressively focusing on their central masterbrands. Examples include IBM, Apple, Nokia, Harley-Davidson, and General Electric, all of which were brought back from dormancy or near-death by renewed emphasis on their core masterbrands strengths, as well as deploying other forms of triage.
  • Finally, some masterbrand companies are especially competition-driven in that their managers failed to see the value of fully embracing an organization-wide brand until prompted by their rivals. Examples include United Parcel Service (UPS) that was challenged by the historically brand-driven Federal Express, and MasterCard International, a bank association that shored up its enterprise brand after global onslaughts from arch-rival Visa International.

 

THE MASTERBRAND COMMUNITY

Online communities are multiplying exponentially now that more marketers understand the power of self-perpetuating support systems. But, long before the Web emerged, brand communities were being fostered in many industries. Brand communities are strategically interdependent relationship clusters which form the spokes and wheel that surround and support a well-branded company and, in particular, a masterbrand. A brand community is populated with the employees, customers, shareholders, suppliers and strategic partners, and other stakeholders, who are sustained by a shared commitment to a pervasive masterbrand value proposition. That proposition centers on independence and creativity at Apple, the demystifying of investing at Charles Schwab, unbridled innovation at Nokia, and peerless customer service at Virgin and IBM.

Brand community building is also a far more effective device for generating replenishable customer loyalty than more conventional branding disciplines alone, which often do not make full use of enterprise-wide supports. More commonly, in fact, conventional multiple brand building – and its inevitable silo building – can often hinder efforts to multiply the impact of the company’s entire portfolio in the marketplace, as managers at Procter & Gamble, Nestlé, Unilever, and other companies have periodically discovered.

MASTERBRANDS THAT ARE MAKING THEIR MARK

Successful masterbrand companies can be found in a wide range of industries with disparate business strategies. Yet, their management share in common a magnified commitment to a central brand core that fuels their business gains. Several examples of note:

Nokia– Nokia may be Europe’s best example of how masterbrand building unifies companies and multiplies value. Once a weak conglomeration of rubber, wood, and cable companies, Nokia established a firm foothold in the early cellular business in the 1980s. But before the company could reach full stride in its new technology mode, Nokia lost its CEO to suicide and its biggest customer with the fall of the Soviet Union. A few years later, current CEO Jorma Ollila took over and began creating a masterbrand company inside and out.

The people of Nokia work in greater harmony than their counterparts at competitive firms, thanks in part to The Nokia Way, a series of internal meetings that consistently yields just enough centralized direction to enable its people to press forward in a sort of semi-organized creativity. Nokia’s unique organization prompted Fortune magazine to call it “perhaps the least hierarchical company in the world.” 3 A notable step in rebuilding Nokia around a masterbrand model involved the studying the great global brands of the world (e.g., Nike, Daimler-Benz) and adopting an approach to manufacturing and marketing which employs the Nokia brand meaning as a lens when designing, distributing, marketing, and selling a product.

Nokia is now the world’s leading supplier of cellular phones, and in a strong position to compete effectively in a huge spectrum of technology sectors. As ultimate proof of the wisdom of its masterbrand strategy, stockholder value has multiplied +2,300% in the last five years.

IKEA – The controversial Ingvar Kamprad, founder of the world’s largest furniture store chain, set the course for his born and bred masterbrand in a speech to Swedish bankers in 1976. The speech, which is called the “Furniture Dealer’s Testament”, and which now serves as IKEA’s “bible”, includes pronouncements such as “Waste of resources is a mortal sin” and “Only while sleeping one makes no mistakes.”

The company has a sense of casual openness and freedom that has carried the masterbrand to the forefront of a more relaxed atmosphere in homes across the globe. The company’s mission is the masterbrand’s mantra, once described as “To make life better for the masses.” 4 The IKEA masterbrand is lived among its employees, a fact, which has played a key role in attracting 150 million customers worldwide.

Charles Schwab & Co. – If Charles Schwab & Co. were a bank, the company would rank in the top five in the US in custody of household assets. In a 1998 national survey, Schwab was the most frequent choice among consumers of financial services as an alternative to their own banks. Schwab has continuously redefined its masterbrand through first-mover innovation such as discount brokering (its flagship business), mutual funds portfolio building (under the OneSource sub-brand), multiple customer channels (local offices, Schwab.com, telephone), the marriage of discount brokering with affiliated investment management (Schwab Advisor program), and a new model for serving fee-based investment managers (Services To Investment Managers program).

Charles Schwab is also a successful masterbrand community because its employees are trained to be, in this order: customer service reps first, then marketers, and finally product specialists. They are taught to understand the needs of the investor and to align the company’s programs to fit those needs, but to do so with the objectivity that can only come from a non-commission incentive system. That is particularly crucial in the online environment where Schwab has surpassed itself as a community builder. As Karen Chang, head of Schwab’s retail branch network, has put it: “Schwab.com = Schwab.future = Schwab.community.” 5

MASTERBRANDS AND E-COMMERCE

As of early 2001, more than eighty formerly highflying dot-coms have fallen to earth in only ten months, triggering commensurate layoffs of nearly 50,000 sadder but wiser souls. 6 It is understandable that in the rush to secure funding and be first to market with the next big thing, many e-enthusiasts forgot to dot all their “i’s” and cross all their “t’s.” In addition to lashing their fortunes to faulty business plans, many failed to add an all-important “m.”—not momentum or money (there was plenty of both in the beginning), but the “m” of the masterbrand that can convert a conventional “dot.com” into a “brand.comm“—a powerful, Internet-assisted brand community.

Whether pure play virtual companies or clicks and mortar hybrids, we believe that survivors of the inevitable cyber shakeouts will be those brands that use the Internet not merely to by-pass conventional distribution channels or cut costs, but also to create new and leverage existing brand communities. While today’s strategists are rightly skeptical about claims that the Internet means “the end of business as usual,” 7 there is much to learn from even the failed attempts of up-start start-ups and established companies alike. In short, we caution against throwing the hyperlink out with the hype.

WHY TRANSPARENT ORGANIZATIONS MUST BECOME MASTERBRANDS

A recurring theme sounded by Internet pundits focuses on the channel’s potential to create the theoretical economist’s ideal (and the conventional marketer’s nightmare) of a “frictionless” economy—a totally transparent marketplace of freely available information. Not surprisingly, early business strategy focused on using the Internet to “disintermediate” traditional distribution channels and deal directly with individual consumers. From the consumer’s standpoint, however, some e-tailing looked less like one-to-one and more like mano a mano marketing, as do-it-yourself (or else) websites offered “cookies” but no milk.
We see an elective affinity between the notion of a masterbrand and the transparent organizations that increasingly define the nature of competition in an Internet-based economy. If today there’s “no place to hide,” with the discipline of masterbrand management, there’s also no reason to do so. As virtual organizations come to exist in nothing more (or less) than information flows across intranets and extranets, conventional distinctions—inside vs. outside, employee vs. customer, company vs. company—are elided. Virtual value chains that allow mass customization, just-in-time delivery and other staples of modern business practice loop into virtuous circles of reciprocal value creation. The pace of change is both exhilarating and potentially disorienting for conventional organizations and management strategies.

Making a virtue of a necessity, a transparent organization needs to crystallize around a stable focal point that coherently and consistently aligns the efforts of all brand community members through a shared vision and commitment. More than ever, if anarchy and entropy are to be avoided, the center must hold. In our view, a masterbrand is uniquely suited to provide the kind of dynamic continuity today’s business organizations need to remain true to themselves, even as they evolve and grow. To understand how the discipline of masterbrand management can succeed where other approaches may fail, we have to consider what it means for a brand community to “own” its masterbrand.

MANAGING WITH(IN) THE BRAND.COMM

As with any social organization, a brand community exists in and through—but transcends—its members and thus cannot be “owned” exclusively by any one of them. Sun Microsystems’ entire business is predicated on the notion that value resides in (and grows exponentially with) the growth of the computer networks its products and services support. Paradoxically, the value of a brand to its legal owners grows in proportion to the extent that it is truly “owned” by a wider brand community. Just as cutting edge companies outsource functions to those best able to support their core processes, so too does a masterbrand managed company “outbrand” the competition by deploying its brand into a wider brand community of employees, allies, customers and investors. Managing a masterbrand thus means managing with—and within—a diverse brand community that collectively has a powerful moral (if not narrowly legal) claim on the brand.

As such, managing a masterbrand is less about exercising command and control through a top-down formal structure and more like orchestrating an old-fashioned barn raising. Like anything worth building, it can be a messy, but ultimately rewarding, business. Whether they began as conventional “old economy” companies or as “new economy” up-starts, successful masterbrand enterprises have found the formula for maintaining their identity, purpose and business momentum, even in the midst of almost constant change.

Enron illustrates the former trajectory. What was once a suitably solid (even stolid) natural gas transportation company in the southwestern United States has emerged as one of the world’s pre-eminent energy companies, largely by redefining what “energy” is and how it can be employed. Recently completing its first year of operation, EnronOnline recorded some 400,000 energy transactions worth about $200 million. Unlike impartial exchanges and auction sites which take small transaction fees from individual buyers and sellers, Enron Online is a true brand.comm, with Enron acting as a “counterparty” to each trade, guaranteeing price, terms and delivery and making money on the spread between its buying and selling prices.

CONCLUSION

Even the fervent brand skeptics cannot deny the contribution of product and service brands to the total market equity of their sponsoring companies. What we are now discovering is the awesome market power that can be wielded by corporate leaders who drive a focused and magnetic sense of brand throughout their enterprises. By building company-wide masterbrand infrastructures, behaviors, and attitudes, those companies gain significant competitive advantages far beyond what can be achieved by their individual product and service brands. And, that advantage appears to be attainable whether the company is competing within traditional business markets, through the online channel, or via hybrids thereof.

As a consequence, there often appears to be a greater likelihood of achieving business goals because the organization, and its supporting community, are a more cohesively unified army of brand believers who sustain their businesses in even the most competitive environments.