Behavior before brand

Governments should start to be much more proactive about defining how corporations are allowed to brand themselves and thus help shape the way they behave

Chandran Nair is the founder and CEO of the Global Institute for Tomorrow (GIFT)
Chandran Nair is the founder and CEO of the Global Institute for Tomorrow (GIFT)

The profusion of media stories about corporate malfeasance has put the lie to the claim that there is no such thing as bad publicity. Public trust in corporations is at an all-time low. Fewer than one in five respondents to the 2013 Edelman Trust Barometer believed that a business leader would tell the truth when confronted with a difficult issue. The conclusion to Interaction Associates’ 2012 Building Trust report was that "trust in business [had fallen] off a cliff", which is little wonder after repeated revelations in the vein of Starbucks paying zero pounds in tax in the UK or Microsoft handing encrypted messages to the US National Security Agency or GSK bribing Chinese officials for decades.

At a time when corporations span the globe and make up a bigger part of our lives than ever before, this is a damning indictment of the status quo. But rather than getting the message and reflecting on their behaviour with humility, companies have responded by investing larger sums than ever before into creating and maintaining brand identities, seemingly oblivious to the reality of public outrage. As it stands now, selecting the "right" font can cost you millions, the right logo even more. The management consultancy Accenture paid a staggering $100 million to Landor Associates for its logo in 2000, despite the fact that the name had already been decided through an internal employee competition. " Pepsi’s 2009 redesign of its logo was justified with reference to, among other things, the Mona Lisa, the Parthenon, the Earth’s Geodynamo and the fact that the logo’s "energy fields are in balance". Meaningless or unintentionally humorous mission statements are so common they have become passe´—Enron’s motto was "respect, integrity, communication and excellence".

This is the very definition of missing the point. Corporations have been misled by marketing gurus and branding consultants into believing that such efforts will result in a brand that attracts new customers, keeps existing customers loyal and creates a consistent identity for the company. This is complemented with massive advertising campaigns—McDonald’s spent $1.3 billion on advertising in 2012.

But this approach is misguided for several reasons. When the explicit purpose of an activity is to entrap gullible consumers, it raises serious ethical questions. Nor is the public so stupid as to be fooled by large advertising budgets designed to conceal the facts about underlying bad behaviour or the truth about a company’s goods and services. Bank of America’s attempt to position itself as "The Bank of Opportunity", for example, did not prevent consumerist users from repeatedly voting it the worst company in the US for its predatory practices and role in the 2008 financial crisis. If ever a time existed when brand integrity could replace real integrity, it certainly isn’t now.

Corporate bureaucracies

But it is actually the internal effects an obsession with brand can have on a company that are most damaging. According to the annual CMO Survey by Duke University, the size of businesses’ marketing budgets in 2014 grew to 11 percent of the total firm budget, up from 8 percent just three years earlier, and the number of marketing employees grew to 6.3 percent of total employees from 4.2 percent over the same period. Similarly, the percentage of students graduating from Harvard Business School with a degree in marketing was 15 percent in 2013, more than double the number in 2008. Many companies have become filled with overpaid and overstaffed PR, communications and marketing departments, which, once they reach a certain size, can all too easily become vested interests more concerned with protecting their own empires than acting in the best interest of the company. Anyone who has worked in the corporate world will know from personal experience the Kafkaesque experience that is dealing with a company’s "brand guardians", whose only job seems to be preventing others from doing anything new, creative or productive.

These corporate bureaucracies keep growing and are a source of the worst kind of conformity. It is not difficult to find irony in the fact that while we preach about spreading open and democratic societies, corporations remain highly undemocratic and full of (somewhat) benign "dictators" at many levels. But brands that cannot be challenged—even by earnest employees keen to protect the company from inappropriate brand messaging—are worse than dictators, they are dogmas. They are completely inflexible and can never be questioned, even by senior management. It is no accident that these same managers are often caught by surprise by fresh branding strategies and are left feeling impotent in their own companies. This is a sign that the branding department has become a law unto itself.

Fighting the war for talent

At a time when companies are constantly claiming that they are "fighting a war for talent" as they scramble to hire and cultivate the best employees, they are also actively promoting a system that constrains talent and prevents genuine innovation. When employees are told to "believe in the brand or else", they are either pushed away or, even worse, fall for their own PR. The result is an echo-chamber of low-level ideas rather than the diversity and creativity that companies claim to want.

The discovery of a slightly sweeter fragrance of shampoo or pink-coloured cookies that appeal to a niche demographic is what passes for innovation in the consumer goods world. But what is the point of hiring the "best people" and paying them well if they are then forced to work in an environment totally lacking intellectual freedom or the ability to question dogma? Since the financial crisis in 2008, many commentators have complained about the enormous waste of talent that Wall Street has become because of its practice of employing smart people to engage in socially destructive behaviour. But in many other companies, smart people have been employed effectively to keep the company railroaded and heading in the same tired direction, which hardly seems an improvement or the basis for real strategy.

The confluence of an overemphasis on marketing, branding and PR can also create an attitude of "play now, pay later", where employers start to believe that they can behave badly today and make it up, or cover it up, with some combination of PR and CSR tomorrow. In 2007, the same year it was busy selling toxic mortgage-backed securities to investors all over the world, JP Morgan launched JP Morgan Social Finance, whose stated goal is "generating positive impact alongside financial return". And Apple’s belief in itself as a "cool" company certainly seems to have helped it countenance tax avoidance on a massive scale, now under investigation by both the US Senate and the EU. During his testimony before the US Senate on the issue, Apple CEO Tim Cook not only denied any wrongdoing, but offered his own suggestions on how the American tax system might be improved. In the short-run, such tactics may even work. Cook’s testimony was greeted not with outrage, but by multiple senators proclaiming how much they loved Apple products. But in the long-run, such an attitude creates a toxic workplace environment and is no basis on which to build a successful organization.

Take BP, which spent $211 million designing and rolling out its "Helios mark" logo and followed it up by rebranding itself "Beyond Petroleum". According to Lord John Browne, its then CEO, the fresh brand would "greatly strengthen the sense of identity and common purpose" of BP’s 100,000 employees. It was undoubtedly a clever campaign and maybe even well-intentioned although Greenpeace described it as ‘green-wash’. But the underlying behaviour of BP’s management remained substandard, and whatever goodwill it might have earned with clever slogans was more than wiped out by the Gulf of Mexico oil spill. If the public is allowed to maintain the sense that although brands may change, the underlying corporate culture remains rotten, it will inexorably destroy their trust in business.

Behaviour before brand

What should companies do instead? They should learn to start placing their behaviour before brand. Good behaviour creates a good brand without having to spend millions of dollars or create obstructive, insecure and less-than-important PR and communications departments. It also attracts talent far better than an empty promise to "create value" ever could. More importantly, good behaviour is what makes a good company, of which a good brand is only a signifier. In the long run, the best brand in the world cannot cover up a bad product or service, and no lack of PR can kill a good and continually improving one. It isn’t controversial that we should care more about how a thing is than how it seems, but it’s something about which we need to be reminded every once in a while.

This is all well and good, but getting there will admittedly be difficult. The first step must be to recognize the tyranny of branding "gurus" and limit, rather than expand, the power of PR and communications departments. PR and communications do have an important function, but the current trouble is a result of giving them far more power and influence than they should have. One suspects that this is due, in no small part, to the fact that nobody can understand what they are saying half the time, which usually results in one of two reactions—silent compliance or a naive belief that it must be true. Unfortunately, the latter reaction has become all too common among senior executives and even board members, particularly when it comes to the all compelling power and effectiveness of "new paradigms" such as social media.

It might not exactly be scientific, but a lot can be learned about a company by the relative distances of people from the CEO or management team. And recently, the communications and PR heads have been sitting far too close for comfort, and edging out those with more productive functions or challenging insights. Ironically, one solution might be to actually make the fashionable-but-impotent CSR departments, which at present are little better than their marketing or PR counterparts, more powerful. A large part of the reason that CSR initiatives are currently little more than spin-doctoring is because CSR executives are almost always devoid of any real power to change company behaviour. But CSR stands for corporate social responsibility and the way a company behaves is 99 percent of its social responsibility.

Give people in these positions the ability to effect change and bring their insights to bear at the main table, and they might choose to do so. Similarly, marketing departments, especially the people within them with client-facing roles, should be empowered and allowed to shape a company’s brand, rather than simply being given a brief to execute by the branding department. Those who interact with customers daily are in a far better position to decide the direction a company should take than a room of "experts" testing focus groups.

Levelling the playing field

Governments should also start to be far more proactive about how corporations are allowed to brand themselves and thus help shape the way they behave. For example, a tax on advertising that is used to pay for mandatory consumer information reports on corporate products or public interest advertising, will have a direct effect on branding strategies. No amount of regulation will ever solve the problem on its own, but governments should make it as difficult as possible for corporations to make a living by misleading or cheating their customers. Taxing advertising would also go some ways towards levelling the playing field and allowing small, service-oriented companies to survive being overwhelmed by larger rivals with massive marketing budgets.

Finally, business schools and executive education providers claim to be able to impart the skills necessary to be a successful executive and equip their students to navigate the ethical dimensions of a complex and competitive world. So let us take them at their word and ask that they teach their students to guard against the dangers of putting branding before all else or compromising their intellectual honesty. One suggestion—if a company truly stands for something, every employee working there should be able to tell you what it is. If it takes a highly paid MBA 20 minutes to explain just what a company’s values are, chances are they are more for show and less for actually adhering to.

None of this will be easy, and the first wave of changes will have to be made in the face of a great deal of institutional inertia and vested interests trying to protect themselves. But companies are always going on about leadership, and leadership is nothing if not taking the lead.

By putting the proper checks and balances in place to guard against brand overreach, companies will be in a position to make difficult decisions about substantive issues regarding their business—the hallmark of a good brand.

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