The article is a version of a paper published in the Journal of Brand Management (2011).

Jack Yan¹
Jack Yan & Associates
jack.yan@jyanet.com

The Journal of the Medinge Group, vol. 5, no. 1, 2011

WEB 2.0 AND SOCIAL NETWORKS have been hailed as the next media for marketing, its proponents pointing to the presence of politicians and actors on Twitter and Facebook. Since mainstream media pointed out that actor-writer Stephen Fry was on Twitter, there was a sudden growth in subscribers in the UK. A further mention on The Oprah Winfrey Show saw some talk about an ‘Oprah effect’ on Twitter, spurring growth Stateside. The most complimentary publicity for Twitter, however, was for then-Sen. Barack Obama’s presidential campaign, with some crediting the service for his success.
   Each one of these statements has an element of truth to them. There is no doubt that celebrities have managed to harness social media to broadcast to their fans, bypassing the press and setting the record straight. Fans feel somehow connected, as though their idol is talking to them directly.
   The Obama campaign, meanwhile, tapped in to a group of voters who are computer-savvy. The campaign managed to mobilize people who might not have voted, giving the senator an edge that his principal opponent, Sen. John McCain, did not consider.
   But how real are these phenomena and how do they impact on branding?
   Aside from setting some ideas for future research, this paper aims to provide an examination of blogs and social networks, considering their branding potential and what organizations need to consider to build their brands using them.

Why brand online?
The case for online branding has been set elsewhere, with the conclusion that most of the same rules apply. Brands still need to be differentiated and communicated to audiences, and it was found that successful online firms in the late 1990s tended to have strong CEO involvement in their websites.² As the web mainstreamed, countless exceptions emerged: there was no longer a talent vacuum when it came to managing website relations with consumers, and CEOs could step back from answering feedback forms. Staff who grew up in the web era understood how to deal with online questions; databases with copy-and-paste answers were developed; and, in some cases, “knowledge bases” looked for keywords in a submitted question and fielded prepared answers without human intervention.
   In essence, the promise of the 1990s’ World Wide Web began disappearing: once seen as a democratizing force where stakeholders could speak directly to company heads, especially in the small- to medium-sized enterprises that went online in the early days, it became just another medium.
   Blogs were seen as the next step: Chua and Parackal have done some incisive research into CEO blogs,³ which give some leaders a chance to provide audiences with an idea of their philosophy. But in an era of competing media and short attention spans, Facebook updates, fan pages and Tweets became part of the branding lexicon.
   Facebook’s commercial potential was always present, from the minute founder Mark Zuckerberg took the service away from its North American college-campus roots and allowed non-students to create profiles in 2006. It has become more commercialized (and arguably less concerned with user privacy)⁴ since then, in order to capture business and profits through advertising. Originally a site that aimed to connect friends and contacts, Facebook broadened to include groups and fan pages for organizations, creating a closed network of 400 million (and rising) users who advertisers might wish to pitch.
   Many flock to the service. Facebook allowed blogs to be imported, forcing more users to stay on the site rather than go to the source. It gave the impression of direct engagement: companies could, for instance, communicate directly with their supporters. It attempted to bridge the gap between organization and audience again, much like the web and email once did.
   In politics, the author is currently in a bid for the mayoralty in Wellington, New Zealand. A Facebook fan page has been set up, and the same behaviours are apparent: supporters seldom head to email to ask political questions. They field them on his Facebook fan page. Some of his opponents have set up rival pages, and other cities’ mayors and mayoral candidates have done the same in this election year. Interaction is often rewarded with additional supporters.
   Outside politics, the author has observed the growth of the designer Tamsin Cooper, whose Facebook page, set up during the first quarter of 2010, has brought 658 fans at the time of writing. Cooper lives in a town, Arrowtown, New Zealand, of 1,700: the Facebook page has been a way for her to centre her international marketing activities, complementing her website and online sales. Importantly, it allows Cooper to interact directly with her supporters and clients.
   Twitter, which claims to have Sen. Barack Obama as a user—though later it emerged that the ‘Tweets’ were those of his campaign team⁵—is less formal. One user Tweets a statement of 140 characters, usually an update of what that person is doing. In terms of the Obama campaign, the Tweets pertained to the senator’s political speeches and campaign ideals, and followers could ask questions and engage with him.
   It was a masterful use of the service. While it was not Sen. Obama himself on there, it gave the illusion of his presence. It certainly reflected his views. Secondly, his campaign team was careful to follow back as many supporters as possible—Twitter users can see who has become a “follower”, giving them an option to return the favour. This, too, satisfied netizens’ feeling of being engaged: that there was a genuine belief of a two-way street in communication with the senator.
   The desire for engagement is not limited to the United States. The Residents 2010 conference in Wellington, New Zealand, brought residents’ associations from around the country together for a day, discussing issues that were pertinent to them. The Hon Peter Dunne, MP, stated early in the conference that such organizations need to ‘band together’ to fight for their communities, acknowledging that ‘power resides in the community, with their representation and their engagement. Community engagement is not political … local democratization is occurring more in residents’ associations.’
   Showing a video from author John Ralston Saul,⁶ it was stressed that one of the causes of community alienation stems from specialized managers who are employed to solve various problems. But their specialization restricts citizens who have other ideas, which combats the democratic nature that one expects.
   Other comments heard include, ‘The Local Government Act does not empower local representatives to represent local people’; ‘Councils will become less representative, because their business objectives will alienate citizens’; and ‘As [local issues] become more pressing, how can we activate the public response?’
   In another speech, New Zealand’s native Māori population was a victim of “ticking the boxes” when it came to their needs, trivializing and indeed restricting what they were about. (Parallels were drawn with the rights of women and blacks in the US in earlier centuries.) There was a general fear of politicians losing power through engagement, and talk after talk highlighted that engagement was not happening early enough with citizens.
   If there was one sector where engagement was called for consistently, it was in local politics. In her concluding conference speech, New Zealand Chief Ombudsman Beverley Wakem stated, ‘The internet’s tools are important [in describing] how to mobilize and educate people regarding their rights and the legislation.’
   Short of an Obama-style campaign engaging the public, New Zealand’s local political scene was in dire need of politicians and political processes that could engage the public. In the wake of the American presidential election, citizens’ feeling of alienation could quickly be dealt with through social media.
   The author is currently in a bid for the mayoralty in Wellington, New Zealand. A Facebook fan page has been set up, and the same behaviours are apparent: supporters seldom head to email to ask political questions. They field them on his Facebook fan page. Some of his opponents have set up rival pages, and other cities’ mayors and mayoral candidates have done the same in this election year. Interaction is often rewarded with additional supporters.
   Far more trivial, though no less interesting from an academic perspective, is the Twitter account of a fictional character, Jim Keats, from the recently finished television show Ashes to Ashes. An unofficial account, it was set up in January 2010, long before the character was introduced on the show. After the show commenced, the Keats account (at twitter.com/jimkeats) attracted an average of 100 additional followers per week, of fans wishing to supplement their television viewing with Tweeting—even if it was with a fictional person. Very few of the 900 followers the account attracted were bots, surprisingly. ‘Jim Keats’ interacted with other fictional characters on the service, all role-played by other fans. It helped take the programme’s brand on to Twitter and provided viewers with an additional access point to the TV show.
   In most cases—those in which fictional characters are not involved (!)—blogs, Facebook and Twitter are helpful in revealing the thinking of the people behind the brands. They satisfy a need: the desire of engagement with a brand they wish to be associated with, or, to put it in Engeseth’s terms, to feel “one” with the brand.⁷ Their motives are connected to the idea of corporate citizenship and how successful brands promote its ideas.⁸
   Engeseth’s theory is that the separate nature of many brand relationships—the “them” and “us”—is obsolete. Companies need to collaborate with consumers not just for R&D, but for everyday marketing purposes. Examples he cites includes Linux, where the user base collaborate on developments to the operating system and become evangelists in the process. WordPress, the blogging platform, is another. Engeseth also points out that Michael Dell spends 40 per cent of his time dealing with Dell computer customers directly. As does Ingvar Kamprad, the founder of Ikea.
   Brands cannot be controlled centrally or in a top-down manner in these circumstances. Coinciding with these developments has been the rise of virtual working, of people expected to unite under a single banner with a uniform brand despite being based in homes or in spread-out offices.
   But Linux is a real collaboration: the results speak for themselves. The real fear with brands in the social networking era is that they will fall into the same traps they did with email and the web, where the interaction with those in charge is gone. Facebook and Google, two brands that rank relatively highly in surveys, are notorious for being opaque: Facebook’s privacy changes frequently prompt criticism, while there is virtually no support for the free users of Google, unless they are lucky enough to find a person in authority. Both companies may provide tools for online interaction that can aid transparency, but neither practises it when it comes to their core products.
   Above, the author has pointed out that Barack Obama’s Twitter account, during the presidential campaign, was not manned by him. Thus, it is as easy to obscure one’s identity with these services as it is with any other medium.

   An analysis of some of the top celebrities and politicians indicate that they are not engaging their fan base, undermining the use of the Twitter service. There is little or no engagement by some of the most-followed users of the service, including Ashton Kutcher, Oprah Winfrey and Al Gore (Table 1). For them, Twitter is a one-way service, an extra broadcast channel where the relationship with the audience matters less than their own message. However, President Obama, Britney Spears and Stephen Fry have better ratios, indicating more engagement, or at least, a greater intention to engage. (The ideal number is 100 per cent, although this is impossible to expect, especially when a Twitter account acquires mass following over a short period of time.)
   Given this, are they genuine tools for transparency and the sort of “oneness” preached by Engeseth? And what advantages can organizations get from using them?

Brands and social networks
The theory behind social networking is sound. Brands must be genuine. Those that are “surface” are soon uncovered. It is no different from a government offering sound bites that seem pleasant to the public ear, but whose policies differ from the electorate. It is a sure way of being unelected at the polls the first chance voters get.
   By going to blogs and social networks, people can understand the personalities behind the scenes. In fact, this can prove more useful for the smaller organization because the principal can be the one who writes, updates the Facebook fan page, or Tweets. It allows that organization to be more responsive to audiences and consumer demands. It also allows the chief decision-maker in the organization to grasp the prevailing mood of the public.⁹ They are more cost-effective media than above-the-line advertising or even formal PR,¹⁰ and go some way to levelling the playing field for small- to medium-sized enterprises.
   Brands that are unsupported by additional media can fail because they are not letting their stories shine through. The importance of “legends” inside the organization have been shown by many writers and researchers to be important, providing a hook for brands to be understood internally and externally. Therefore, even the less well presented company, lacking the budget to look as swish as a richer competitor, might be able to exploit a competitive advantage by telling a story without the interference of a communications’ department.
   The personalities can come through: a traditional law firm might still Tweet but do so in a formal way—writing in complete sentences, never abbreviating or using internet acronyms, and providing useful knowledge to its followers. It would have to stop short at revealing any privileged information, but its personality can still come through. At the other end of the scale, a musician might provide samples of her work online, downloadable through a blog, and connect that blog automatically on to her Facebook page and Twitter account. Regardless of the situation, a unique voice can emerge, one that is sufficiently differentiated from competitors. The organization manages to solve not only the question of differentiation, but those of transparency, engagement and accessibility.

Issues
   With an increasing amount of activity happening in the social media sphere, it would seem prudent to examine how to incorporate the media into a brand strategy.
   Along with his colleagues at the Medinge Group, the author participated in writing Beyond Branding,¹¹ which dealt with the growing consumer desire for transparent brands. There is nothing to suggest that that desire has lessened in the last seven years: anecdotally, it has grown as social media have.
   It would suggest, for many organizations, a total change in how they communicate, abandoning the top-down process for something that accepts inputs from audiences to drive strategies.
   When many authors discuss transparency in branding, it is not simply about ethics. There are obvious savings in communicating the same message to internal and external audiences. By being open, every audience has the same potential access to the same information. Perhaps most importantly, stakeholders feel that sense of corporate citizenship and oneness, which helps build brand loyalty and grows awareness.
   Issues for practitioners will include:

• how to include this level of transparency into a branding strategy, and whether the organization itself can handle the added work. As part of the vision-setting for the organization, organizations must ask themselves if they desire extra scrutiny. Questions will include whether principals are willing to schedule in regular entries on to a corporate blog, and work alongside their communications’ department. The structure is flatter. They might want to consider whether they wish to read the feedback personally. Ideally, they will need to ensure that it is their voice and not one that has been too sanitized by communications. The organization has to consider whether these statements appear in a corporate account or a personal one, and the relationship between the two;
• it will have to look at researching its audiences and whether they demand the level of interaction that social media provide. Some businesses might not need it because their audiences are not connected online: those targeting elderly audiences might find conventional media to be more useful. The author notes that a growing number of clients are finding that their audiences are demanding, at the last, a Facebook presence;
• the organization will have to look at extending the rules surrounding its brand usage in to new media. It will also have to consider whether it is to influence the appearance of personal accounts. If personal blogs and Twitter accounts have already been set up before the organization has created its own, it needs to ask itself how official they are;
• the organization needs to consider how to measure the success of branding in social media, either through surveys on whether audiences believe transparency has increased, or using other measures, such as brand equity constructs, revenue, market share, or follower or fan numbers.

Challenges to transparency
   Labour malpractices, child exploitation and environmental harm have nothing to do with branding, even if, in the eyes of Klein¹² or Quart,¹³ the profession is complicit. Equally, the misuse of blogs and social media are not due to any inherent problem with the platforms. If certain parties choose to use Twitter as a one-way channel, then it is their choice: there is no rule book that governs the service. But it would be a wasted opportunity, doing little to promote interaction and understanding audiences. Instead, those that use the technologies as top-down media risk making themselves look separate, going against transparency and oneness. In an era when both are valued, the brand, whether personal or organizational, is weakened through appearing “above” one’s supporters.
   Secondly, there is the problem of having someone other than the claimed person behind the blog, Facebook or Twitter account. The organization should ensure that in the case of a shared blog or Facebook fan page, the identity of the writer is known; but ghost-written media can prompt criticism; this can only undermine the brand.¹⁴
   The looming problems are also technological. Each medium starts off being exclusive. The programming that appears on that medium appeals to that exclusive audience. But as it mainstreams, that exclusivity is lost.
   For the most part, there is nothing wrong with this diffusion of an innovation. Television would be useless if TV sets cost the equivalent of a motor car; motor cars would have failed to transform society if they remained the playthings of the rich.
   But with the democratization of technologies, they have become utilitarian. Email was once exclusive; it is now a tool, with few business people using it for leisure as they did 20 years ago. Along the way, spam threatened to make email useless; email newsletters risk being caught in spam filters.
   The same tendencies are emerging in the blogosphere, with some websites generating fake entries. Blogger, the blogging platform owned by Google, has been using a bot to detect fake blogs that are created using automated scripts. A small percentage of legitimate blogs have been deleted including, for a brief period in 2010, one for the respected UK firm Minale Tattersfield, which was out of action for two weeks. Vox, the blogging service owned by Californian firm Six Apart, is a target of many “sploggers” (spam bloggers).
   Twitter, which is much harder to patrol and easier to manipulate, has its share of fake accounts, with programs adding followers and Tweeting fake messages. Reports of Twitter’s growth stagnating have surfaced in the technological press during 2009 and early 2010.¹⁵
   Facebook, meanwhile, is turning off a small minority of users fed up with its privacy changes—although the carrot of 400 million users is too great for many organizations to abandon it.
   All may well turn users away at some point, especially when they feel they can no longer have the sense of engagement and oneness with the brand.
   Therefore, while these tools are useful, they may well be replaced by others in the 2010s. Perhaps those tools will integrate visuals and the person’s voice, things that are (at this point) harder to automate. For now, they are real, and they need to be considered in a branding strategy.

Conclusion
   Audiences have demanded greater ethics and transparency from brands for many years. However, that demand has become far louder as audiences found their voices through the internet, in particular, driving a greater awareness of social responsibility in the 2000s. Alongside those demands have been ones for transparency, forcing organizations to work more closely with their audiences. People want to know that they have some influence over the brands they connect with.
   As technologies change, social media are where audiences can interact with those brands. They have their pitfalls, with many organizations not building them into their overall branding strategies, or failing to use them to interact. In neither case is transparency increased. Technological problems limit their appeal.
   Nevertheless, if used correctly, blogs and social media can be useful tools for differentiation as they allow a company’s personality to shine through. They also provide means for audiences to engage and access brands. Importantly, they can provide greater transparency, a behind-the-scenes look at the thinking of organizations, giving their brands greater relevance and appeal.

Notes
   1. LLB, BCA (Hons.), MCA. CEO, Jack Yan & Associates (http://jya.net); Founding Publisher, Lucire (http://lucire.com); Director, the Medinge Group (http://medinge.org). Copyright ©2010 by Jack Yan & Associates. All rights reserved.
   2. J. Yan: ‘Online Branding: an Antipodean Experience’, in Kim, Ling, Lee and Park (eds.): Human Society and the Internet. Berlin: Springer 2001, pp. 185-202.
   3. A. P. H. Chua, and M. Parackal: ‘Co-creating value through corporate blogs: a proposed research framework’, 5th National Conference on Computing and Information Technology (NCCIT), Bangkok, Thailand, May 22-3, 2009.
   4. B. Krishnamurthy and C. E. Willis: ‘On the leakage of personally identifiable information via online social networks’, Workshop on Online Social Networks (WOSN), Barcelona, Spain, August 17, 2009.
   5. M. Kirkpatrick: ‘Obama: “I have never used Twitter”‘, ReadWriteWeb, November 15, 2009, <http://www.readwriteweb.com/archives/obama_i_have_never_used_twitter.php>.
   6. Cf. J. R. Saul: The Collapse of Globalism and the Reinvention of the World. Camberwell, Vic.: Penguin 2006.
   7. S. Engeseth: One: a Consumer Revolution in Business. London: Cyan-Marshall Cavendish 2005.
   8. N. Ind and R. Bjerke: Branding Governance: a Participatory Approach to the Brand Building Process. Chicester: J. Wiley & Sons 2007, pp. 51-7.
   9. An example of a responsive CEO is Christian von Koenigsegg, who made modifications to his company’s sports car after criticism on the TV show Top Gear. A new model was ready for testing within weeks. A larger company would have added the criticism to a longer improvement cycle and the modification might not have been seen for years.
   10. S. Engeseth: The Fall of PR and the Rise of Advertising. Stockholm: Stefan Engeseth Publishing 2009.
   11. N. Ind (ed.): Beyond Branding: How the New Values of Transparency and Integrity Are Changing the World of Brands. London: Kogan Page 2003.
   12. N. Klein: No Logo: Taking Aim at the Brand Bullies. New York: Picador 2000.
   13. A. Quart: Branded: the Buying and Selling of Teenagers. Cambridge, Mass.: Perseus Publishing 2003.
   14. Especially in politics: opponents of the two high-profile politicians in the 2008 US presidential election, Barack Obama and Sarah Palin, flung accusations about ghost-writing.
   15. D. Gross: ‘Has Twitter peaked?’, CNN.com, January 26, 2010, <http://edition.cnn.com/2010/TECH/01/26/has.twitter.peaked/index.html>.

Dr Nicholas Ind
Partner, Equilibrium
nind@equilibriumconsulting.com

The Journal of the Medinge Group, vol. 5, no. 1, 2011

WHILE CORPORATE SOCIAL RESPONSIBILITY IS a widely used and well-understood term, conscientious brands is not. Its origins lie with the Medinge Group, which since 2004 has given its annual Brands with a Conscience awards. The Medinge Group argues that a brand with a conscience has the following attributes.

• It has a visible conscience.
• It apologizes when things go wrong.
• It invests time and energy in relationship building.
• It promotes the value of caring for one another.
• It acknowledges that we are all fundamentally equal.
• It’s visibly accountable for all its actions.
• It takes risks in line with its values.

The attributes were not defined through research, but rather were derived from discussion among members of the Group.
   In thinking about brands as conscientious, one important association to emphasize is that of services dominant logic.¹ Here we can argue that it is the connectedness of consumers and other stakeholders with the brand owner that creates the brand. A brand may be managed by an organization, but its meaning is formed out of the purchase, usage and dialogue that the organization and stakeholders engage in. This view is relational and suggests a model of inseparability between the one who offers and one who consumes. It shifts the idea of brand building from transactions to relationships: ’because a service-centred view is participatory and dynamic, service provision is maximized through an iterative learning process on the part of both the enterprise and the consumer.’² The importance of this change of perspective is not only due to the dominance of service industries in OECD (Organization for Economic Co-operation and Development) countries³, but also to a reinterpretation of the process of exchange. Vargo and Lusch argue that everything, whether tangible or intangible, is a service. This distinction also serves to emphasize that increasingly brand owners cede control of their brands to consumers. As people use brands, discuss them with others, form communities of interest and interact online with companies, so the influence of the brand owner diminishes. Now a brand is created in a conversational space where the organization and the individual meet.
   The word conscientious also brings specific associations with it. It is a word that we normally apply to individuals and it suggests attributes such as hard-working, thorough and attentive. It conveys the idea that someone is aware of the needs of those around them. If we connect the word to brand, the implication is that the brand owner is capable of understanding and meeting the needs of diverse stakeholders; of extending sympathy and creating value for all.⁴ As Rorty notes,⁵ the moral imagination, which is essential to an ethical perspective, occurs when people are willing to move beyond the possibilties dictated by precedent and empathize with others. This is a view that is distinct from approaches that stress a narrow focus to creating value and recognizes instead the interconnectedness of all those that touch or are touched by an organization.
   This is becoming increasingly important as the size and influence of organizations and their impact on more aspects of people’s lives grows. Indeed, we can argue that the role of the organization has changed: ‘companies have to recognize their accountability not only to shareholders, but to all audiences and to society as a whole.’⁶ This is a point that Freeman⁷ makes when he writes that the stakeholder view is an ethical requirement for companies and that the linkage of different stakeholders requires a balanced approach. In their 2007 book Freeman, Harrison and Wicks⁸ note that the the primary aspect of corporations is cooperation. They suggest that the business organization should be a vehicle ‘by which stakeholders are engaged in a joint and cooperative enterprise of creating value for each other.’⁹

The attributes of ‘Conscientious Brands’
If we can argue that a conscientious brand is one that is cogniscent of, and tries to meet, the needs of all its stakeholders, what might this mean in terms of attributes? Building on the Medinge list, we would argue that there are three core attributes that are necessary for a brand to be seen as conscientious: a committed and inclusive approach, the ability to think long-term and a willingness to keep promises.
   One important omission from the core attributes however should be noted: altruism, which can be defined as an unselfish regard for the well-being of others. We encounter a problem here of who ‘others’ might be, but if we argue that ‘others’ encompasses stakeholders external to the organization, altruism creates a problem of imbalance. For as well as achieving the well-being of others, brands must be able to deliver well-being for themselves and those inside the organization. Altruism could consign a brand to destructive decisions. In its place we might argue that brands should have a selfish regard for themselves and for the well-being of others.

A committed and inclusive approach
A facet of conscientious brands is that Corporate Social Responsibility (CSR) is not seen as a marketing tool or a department or a process that orbits far away from the corporate sun, but is integrated into the fabric of the organization. The greater the orientation towards a communications-based approach, the stronger the tendency for CSR to be seen as superficial. In fact, telling consumers about CSR through traditional media such as advertising increases the risk of provoking scepticism.¹⁰ However, there are examples such as the Norwegian sportswear brand Stormberg,¹¹ the Dutch Fair Trade pioneer Max Havelaar, the Swiss Bank, Pictet et Cie and the Bangladeshi telecoms operator Grameen Phone, that are stakeholder-focused and make CSR a part of everyday practice.
   For example, Pictet et Cie, which was founded in 1805, has a focus on sustainable development and encourages the maximum investment in sustainable areas for a given risk. The bank manages a Water fund, which was launched in 2000, and has become the world’s largest of its kind, with over €4 billion in assets; and a Clean Energy fund. The company has also establishe the Prix Pictet—the world’s first international prize dedicated to photography and sustainability—mandated to encourage the use and power of photography to communicate vital messages to a global audience. Pictet et Cie understands that business is not somehow separate from the world, but is very much part of it and must demonstrate a broad commitment to stakeholders and to society at large.
   Hewlett-Packard (HP) also exemplifies this in the way it works with other companies, governments and NGOs to improve the health, education and infrastructure in developing markets, because its long-term growth depends on new consumers. Anholt writes of HP and others, that ‘they (big companies) need consumers who are wealthy enough to buy their products, have enough free time to enjoy them, are educated enough to consume advertising messages and evaluate products and brands, and live in countries where there is the liberty to make money and spend it.’¹²

Long-term thinking
Key to the cited examples is the prevalence of long-term thinking, which runs counter to the sometimes short-term view of shareholders. Acting conscientiously means rejecting expediency for principle, temporary advantage for long-term gain. Grameen Phone didn’t look a good business prospect in the late 1990s in a country suffering from high levels of corruption, political uncertainty and poor infrastructure. But new distribution methods were established, low-cost pricing plans introduced and innovative and socially valuable services, such as HealthLine and Community Information Centres, established. Today, Grameen Phone has 23 million subscribers (February 2010) and is the most desired company to work for in Bangladesh.
   At Anglo-Dutch fast moving consumer goods company, Unilever, reducing environmental impacts while improving performance is the core vision and it means taking a longer-term view and tackling short-termism head on. In 2009, CEO, Paul Polman, in an attempt to move the focus away from short-term returns, stopped providing earnings guidance to investors. Seeing his mandate as more concerned with long-term success, he also railed against hedge funds, arguing, ‘they are not people who are there in the long-term interests of the company.’
   One implication of shareholder short-termism might be that it is easier for privately owned companies to act conscientiously. While Freeman et al¹³ argue for the mutual interest of different stakeholders, the power of shareholders in publicly quoted companies whose primary motivation is in above average returns can run into conflict with other stakeholders. In privately owned companies such as Pictet et Cie, Max Havelaar, Stormberg and also US outdoor brand, Patagonia, it is the long-term shared vision of owners and managers that drives decision-making.

Keeping promises
There has been a shift in emphasis in brand-building, from making promises to keeping them;¹⁴ from communication to people. This represents a turning away from traditional advertising and a focus on direct interaction. Indeed, some organizations are moving branding entirely away from communications and towards connecting strategy, culture and a wider stakeholder involvement. They recognize that branding is a process that is too important to be left just to the marketing or communications department. These organizations have understood that brand building is a participative process involving the whole organization and is the responsibility of all employees.¹⁵
   This suggests the importance of widespread employee engagement with the organization’s brand ideology—the set of ideas that define what the organization is, how it does things and what its aspirations are. The better individuals identify and internalize the ideology, the greater the likelihood of its delivery in the experiences that connect the organization and its stakeholders.
   As an example of this consider the software company, Mozilla. This is example of an organization that lives up to its stated mission of promoting openness, innovation and opportunity on the web. It is a non-profit organization that grew out of Netscape and is involved in building communities of people that both help create and use their products such as the web browser, Firefox, an email client, Thunderbird, and a global community of innovators, Drumbeat. Mozilla employs a core group of people (around 300) that develop software, manage process and market the products, but since the start of the company, much of the development of products has been due to the enthusiasm and involvement of customers who have become volunteers.
   In the early days of Mozilla, when it was up against a very dominant competitor in the form of Microsoft, there weren’t enough resources internally. As many software developers identified with the ideology of keeping the web open and accessible to all, they gave up their spare time to develop products they themselves would like to use. It was also an opportunity to work with smart people and solve difficult problems. Of course, Mozilla could have closed their doors to these would-be helpers, but it would have shown up that the principle of openness was just a veneer. Asa Dotzler of Mozilla says, ‘by 2004, the majority of the code had been written by Netscape employees, but there were many hundreds of volunteers who played a substantial role in writing code including important features. For instance the first implementation of tabbed browsing was a volunteer written code. Our first implementation of pop-up blocking and session restore when you crash, and lots of other key features were developed by volunteers.’
   By 2010, more than 12,000 free community-generated add-ons had been implemented. Mozilla has encouraged outsiders to help evolve the project. The idea of improving the internet experience for people everywhere led to one volunteer choosing to pioneer disability access because he felt passionately about it, while volunteers around the world seized on the opportunity to preserve the integrity of their languages, by translating content. When Mozilla launches a new version of Firefox, it is delivered in 75-plus languages simultaneously (2010). As long as the initiatives align with the Mozilla ideology, the organization chooses to make it easier for people to do what they wanted with the brand. A similar philosophy has also been adopted for marketing the Mozilla brand whereby a community of marketing professionals and enthusiast consumers helped to construct and implement a marketing campaign, even to the extent of donating money to run a launch campaign for Firefox.

Challenges to the concept
The concept of conscientious brands and the blocks on which it is built can be challenged from different angles. First, the stakeholder perspective has been challenged by Frooman¹⁶ in particular for being too company-centric. While he recognizes the impact of Freeman’s 1984 book, he also judges that in his ‘hub-and-spoke conceptualization, relationships are dyadic, independent of one another, viewed largely from the firm’s vantage point, and defined in terms of actor attributes.’
   Certainly traditional models of organization-stakeholder interaction have emphasized the organization as doing things to, and communicating at, stakeholders. In a more networked world where interactions are fluid and organizations are more porous and transparent, it has become clear that the connections between stakeholders has become more complex and the locus of control has shifted away from the organization. This has become evident during uprisings in North Africa and riots in the UK (2011) as brands such as Facebook, Blackberry, Vodafone and Twitter have been used to facilitate civil unrest. As a consequence, these brands have been criticized by governments. Yet the point should be made here that it is citizens who are defining how these brands are used (whether it be for good or for bad) in ways that were never conceived of by the brand owners.
   Alternatively, Martin¹⁷ (2010) is critical of much management thinking because it lacks a sufficient customer orientation. He describes the stages of modern capitalism, from Berle and Means’ The Modern Corporation and Private Property,¹⁸ which signified the emergence of managerial capitalism to Jensen and Meckling’s Theory of the Firm,¹⁹ which signified a shift to shareholder capitalism. Jensen and Meckling’s emphasis on maximizing shareholder value has since become a standard of modern management and argues quite explicitly for the pre-eminence of the shareholder. Martin’s critique is that the focus on shareholders hasn’t done anything for shareholder returns: ‘there’s no sign that shareholders benefited more when their interests were put first and foremost.’ Shareholder capitalism has also made organizations dysfunctional, in that it also downplays the interdependence of their audiences. As several studies have shown, involved and engaged employees are important contributors to customer satisfaction which in turn leads to enhanced performance.²⁰ Similarly, having a positive reputation among influential people and organizations helps a business to achieve its broader goals. Where we might diverge from Martin is in his solution to shareholder capitalism. His argument is that the new orientation should be customer capitalism and he cites two key examples of organizations who have exemplary long-term performance and live up to their rhetoric: Johnson & Johnson and P&G. They are interesting choices and they certainly give prominence in their corporate statements to consumers, but the important thing is that they stress the intertwining of stakeholders. Johnson & Johnson’s credo is both long-lived and well known and connects doctors, nurses, patients, parents, children, communities and stockholders. P&G’s Principles state: ‘We will provide branded products and services of superior quality and value that improve the lives of the world’s consumers. As a result consumers will reward us with leadership sales, profit and value creation, allowing our people, our shareholders and the communities in which we live and work to prosper.’

A new approach
’Corporate brands are hugely influential on society and can either be part of the problem in fuelling excessive and high-impact consumption or part of the solution in driving consumers towards sustainable living.’
—Dax Lovegrove, Head of Business & Industry Relations, WWF UK

The central problem for the concept of conscientious brands is that one of the requirements for the organization is encouraging consumption, while a conscientious brand should be aiming to limit or shift consumption to ensure it is sustainable. As the philosopher Slavoj Zizek observes, you only have freedom to the extent that you make the right choices, which means: ‘you are free to do anything, as long as it involves shopping.’²¹
   Yet, there are some signs of resistance to the Zizek view in the emergence of the idea of voluntary simplicity. ‘Voluntary simplifiers’ describes a category of people who have made the conscious decision to reduce their consumption levels and find meaning through reducing their spend on products and services and spending more time on activities that generate meaning for them. This group is anti-consumerist and ideologically motivated.²² The size of this audience is difficult to estimate, but it is suggested that in the US there are some 60 million people who fit into the category.²³ These are still consuming individuals, but they are, in their eyes at least, consuming responsibly within self-defined boundaries. Kozinets has argued persuasively in his analysis of the Burning Man Festival that it is impossible to escape the market²⁴—except temporarily. Consumerism is all pervasive. Yet the emergence of voluntary simplifiers demonstrates that the ‘less is more’ mantra has a significant number of adherents.

Conclusion
Branding is changing. It is moving away from a focus on products and consumers to a services-dominant logic that weighs up and tries to balance the needs to all stakeholders in an increasingly transparent and fluid dialogue. What’s important for marketers and brand owners is to see this change not as a threat but as an enormous opportunity for brands to make a positive difference to the world. Brands can respond to the stated desire of consumers and citizens to live responsibly (even if there is a gap between stated intent and actions)²⁵ by using the tools of branding to change people’s behaviour so that it becomes more sustainable. This extends the role of brand owners beyond simply marketing products to helping people become more ethical. As Devinney, Auger and Eckhardt²⁶ argue, ethically oriented consumption requires consumers to become knowledgeable participants so that they can become more socially conscious in their purchasing and consumption. This will require organizations to move beyond their tendency to short-termism and their overt orientation on shareholder returns. Instead there will be a requirement to focus on the real needs of people and to engage with them in a services-dominant approach that recognizes the importance of participation and dialogue.

Notes
   1. S. L. Vargo and R. F. Lusch: ‘Evolving to a New Dominant Logic for Marketing’, Journal of Marketing, vol. 68, no. 1, 2004, pp. 1-17.
   2. Ibid., at p. 12.
   3. Thirty-four countries that are members of the forum that is committed to democracy and the market economy.
   4. D. Hume: A Treatise of Human Nature. London: Penguin 1969.
   5. R. Rorty: ‘Is Philosophy Relevant to Applied Ethics?’ Business Ethics Quarterly, vol. 16, no. 3, 2006, pp. 369-380.
   6. N. Ind (ed.): Beyond Branding: How the New Values of Transparency and Integrity Are Changing the World of Brands. London: Kogan Page 2003.
   7. R. E. Freeman: Strategic Management: a Stakeholder Approach. Boston: Pitman 1984.
   8. R. E. Freeman, J. S. Harrison and A. C. Wick: Managing for Stakeholders: Survival, Reputation and Success. New Haven: Yale University Press 2007.
   9. Ibid., at p. 6.
   10. A. M. Sjovall and A. C. Talk: ‘From Actions to Impressions: Cognitive Attribution Theory and the Formation of Corporate Reputation’, Corporate Reputation Review, vol. 7, no. 3, 2004, pp. 269-81.
   11. L. E. Olsen and A. Peretz: ‘Conscientious Brand Criteria: a Framework and a Case Example from the Clothing Industry’, Journal of Brand Management vol. 18, no. 9, 2011, pp. 639-49.
   12. S. Anholt: Brand New Justice: the Upside of Global Branding. Oxford: Butterworth-Heinemann 2003, at p. 160.
   13. R. E. Freeman, J. S. Harrison and A. C. Wick, op. cit.
   14. R. J. Brodie, M. S. Glyn, and V. Little: ‘The service brand and the service-dominant logic: missing fundamental premise or theneed for stronger theory?’ Marketing Theory, vol. 6, no. 3, 2009, pp. 363-79.
   15. N. Ind and M. Schultz: ‘Brand Building, Beyond Marketing’, Strategy & Business, July 2010.
   16. J. Frooman: ‘Stakeholder Influence Strategies’, Academy of Management Review, vol. 24, no. 2, 1999, pp. 191-205.
   17. R. Martin: ‘The Age of Customer Capitalism’, Harvard Business Review, vol. 88, nos. 1-2, 2010, pp. 58-65.
   18. A. Berle and G. Means: The Modern Corporation and Private Property. Piscataway, NJ: Transaction Publishers 1932.
   19. M. Jensen and W. Meckling: ‘Theory of the Firm: Managerial Behaviour, Agency Costs, and Ownership Structure’, Journal of Financial Economics, vol. 3, no. 4, 1976, pp. 305-60.
   20. A. Rucci, S. Kirn and R. Quinn: ‘The Employee-Customer-Profits Chain at Sears’, Harvard Business Review, vol. 76, no. 1, 1998, pp. 82-97; M. G. Patterson, M. A. West, R. Lawthom and S. Nickell: Impact of People Management Practices on Business Performance. London: the Institute of Personnel and Development 1997; D. Maister: Practice What You Preach: What Managers Must Do to Create a High Performance Culture. New York: Free Press 2001.
   21. S. Böhm and C. de Cock: ‘Liberalist Fantasies: Zizek and the Impossibility of the Open Society’, Organization, vol. 14, no. 6, 2007, pp. 815-36; S. Zizek: Violence: Six Sideways Reflections. London: Profile Books 2008.
   22. F. M. Belz and K. Peattie: Sustainability Marketing: A Global Perspective. West Sussex: John Wiley & Sons 2009; C. J. Oates, S. McDonald, P. Alevizou, K. Hwang and W. Young: ‘Marketing Sustainability: Use of Information Sources and Degrees of Voluntary Simplicity’, Journal of Marketing Communication, vol. 14, no. 5, 2008, pp. 351-65.
   23. J. A. Sandlin, and C. S. Walther: ‘Complicated Simplicity: Moral Identity Formation and Social Movement Learning in the Voluntary Simplicity Movement’, Adult Education Quarterly, vol. 59, 2009, pp. 298-317.
   24. R. V. Kozinets: ‘Can Consumers Escape the Market? Emancipatory Illuminations from Burning Man’, The Journal of Consumer Research, vol. 29, no. 1, 2002, pp. 20-38.
   25. Young et al. notes an estimated 30 per cent of consumers indicate concern about environmental issues but only around 5 per cent translate this concern into action. W. Young, K. Hwang, S. McDonald and C. J. Oates: ‘Sustainable Consumption: Green Consumer Behaviour When Purchasing Products’, Sustainable Development Journal, vol. 18, no. 1, 2010, pp. 20-31.
   26. T. Devinney, P. Auger and G. M. Eckhardt: ‘Values vs. Value’, Strategy & Business, no. 62, spring 2011.

The article is a version of a paper published in the Journal of Brand Management (2011).

Ava Maria Hakim
IBM Global Solutions
hakimava@us.ibm.com

The Journal of the Medinge Group, vol. 5, no. 1, 2011

THE TRULY CONSCIENTIOUS BRAND cannot exist in a society based on consumerism. The challenge lies in the sociology of capitalism and a system which has created an environment of producers and consumers that support each other in an ongoing cycle of eco-terror and innovation decadence. Patterns of consumption and the animal spirits driving today’s prevailing economic systems have to change in order to go beyond corporate social responsibility (CSR) and the ethical capitalism that remain closely connected with the profit-responsibility of the corporation to its stakeholders. Positive change has to strike at the core of the problem—the model itself. By doing so, the opportunity exists to develop a sustainable economic and social model versus a model that, by its very nature, has more negative impact than the positive impact created from its “sustainability” efforts.
   The model would have at its core the following five concepts:

• Mass production = mass destruction
• Innovation should be mindful, not landfill
• Measure long term use value
• Quality is a craft
• Consumer needs are basic

Brand management plays a significant role in influencing and affecting consumer behaviour. Changing consumer behaviours and production philosophies, while expanding control of strategic brand direction, will determine the speed at which a socially responsible and environmentally friendly economic model will be developed.

Sustainability is parallel to the horizon
In a line diagram of production, sustainability is the horizontal baseline. This represents the essence of sustainability—the ability to endure the forces that act upon it. It also represents the goal—equilibrium of production with the resources needed to produce. In today’s consumption-based society, demand is increasing the distance from the ‘production’ line to the ‘sustainability’ baseline. As production increases, so does waste and the depletion of resources. This has a multiplying effect with more waste potentially impacting future resources and thereby negating any positive results from other pro-environment initiatives. In Figure 1, nothing is moving toward the ‘sustainability’ baseline. This is the production model of consumerism. Sell more, produce more, use more—in any order you like. Sustainable development defined as ‘that which meets the needs of the present without compromising the ability of future generations to meet their own needs’¹ is not possible in this model. As long as development forces an increasing depletion of resources and continued growth rate of waste, “sustainable development” is in fact an oxymoron.²

Figure 1: Impact of a consumption-based model

   Ethical capitalism and CSR initiatives attempt to change the direction of these lines by injecting innovation. But in most cases the innovation can only impact the angle of the lines. For example, eco-efficient design may decrease the angle of the waste and resource line, but because production continues at the same or increasing rate (fuelled by consumers connecting to sustainability) the impact remains incremental. Similarly the use of renewable resources may decrease the rate of depletion of resources, but without a change in production numbers, the direction remains the same. Rarely is there an impact to the production line because by its nature, capitalism is about production and growth. The consumer becomes both the target and source of this destructive desire for growth.

Concept 1: Mass production = mass destruction
As long as the focus is on producing more stuff for more consumers, the ‘waste’ and ‘resource’ lines move away from sustainability. To move closer to the ‘sustainability’ baseline, both the ‘waste’ and ‘resource’ lines need to change direction—waste needs to be removed and resources need to be used at a rate less than or equal to the natural rate of replenishment.
   ‘Researchers have compared humans’ annual demand for resources with the area of land needed to generate the required resources and absorb the wastes … They calculated that in 1961 human demand for resources was about 70 percent of Earth’s ability to regenerate; by the 1980s demand had grown to equal the annual supply of resources, and by the end of the 1990s it exceeded by 20 percent Earth’s capacity to sustain consumption. “It takes the biosphere, therefore, at least a year and three months to renew what humanity uses in a single year”, so that humanity is now eating its capital, Earth’s natural capital.’³ Buddhist Monk Thich Nhat Hanh uses a powerful metaphor—the Sutra on the Son’s Flesh—to illustrate the outcome of maintaining current consumption patterns.⁴ The moral of the Sutra is that in effect we will be eating the flesh of our children if we do not make changes now to safeguard their future through more mindful consumption.
   To create more goods for more consumers, mass resources are taken from one location, often shipped to another location for development and then sent to distribution points for consumer masses around the world. Waste is created throughout the cycle not just at the end of the product’s life.
   To reduce waste, the amount of goods produced needs to be reduced and changes need to be made in how things are produced. Innovation and quality concepts need to be applied beyond mere product design to eco-efficient production systems—or “eco-systems” of production quality. In these “eco-systems” of production, waste is ultimately recycled into the “natural resource” and quality drives the need for fewer replacements and long-term use value (Anderson, Sarah et al 2004; Wessels, Tom 2006).⁵ Figure 2 illustrates the impact of innovation and quality to production reduction—narrowing the gap between waste and resources.

Figure 2: Impact of reduction in production

Muji, a Japanese retail company that sells a variety of household and consumer goods, was established in 1980 with the idea of ‘completely eliminating wastefulness … It started with careful selection of materials, streamlined processes and simplified packaging. The concept of rationalizing products by totally eliminating wastefulness, and at the same time making them more attractive, is at the heart of traditional Japanese æsthetics’.⁶ The company looked to add quality with a no-label philosophy. They design things based on simple functionality–‘not a fancy towel, but a useful towel. Socks with right angles like feet. Beautifully simple bicycles.’ The Muji design process resists technology and prototypes are produced with paper rather than computers, so as not to encourage unnecessary detail. The manufacturing process is determined on the basis of the consumer’s use of the product, which in turn is a design priority. Finishes, lines and forms are minimized for manufacturing ease. They maintain continuous and open communication with customers through the Quality Products for Everyday Life Research Center—a ‘laboratory’ where they have dialogue with customers to determine what ‘will suffice’. Muji does little or no advertising, gaining recognition purely from word of mouth, and quality of product.

Concept 2: Innovation should be mindful, not landfill
The current nature of innovation is iterative, rapid, and for competition’s sake. In an economic system where greater profit and continued growth is the goal, innovation becomes a source of survival and the means for “beating” the competition. This type of innovation creates an innovation decadence that spews products for the sake of creating something “new” rather than creating something useful or something needed. It produces an array of choices that are essentially the same with minor differences in features designed to appeal to the consumer looking for the latest thing or “lifestyle enhancer”.
   Take a look at the number of bottled water drinks. Carbonated water, sparkling water, spring water, filtered watered, water with flavour, and even water with vitamins (for those who prefer not to get their vitamins through proper nutrition). The water comes in big bottles, little bottles, plastic bottles, squirt bottles. The Container Recycling Institute reports that ‘Americans buy an estimated 34·6 billion single-serving (1 litre or less) plastic water bottles each year. Almost eight out of ten end up in a landfill or incinerator. Hundreds of millions end up as litter on roads and beaches or in streams and other waterways. Taxpayers pay hundreds millions of dollars each year in disposal and litter cleanup costs. That’s 877 bottles wasted every second’.⁷ Yet more than one of the water companies claims to be socially responsible with a sustainability focus.
   Furthermore, innovation focused on product differentiation not only stresses out the natural environment with unnecessary resource usage and waste, but it also causes societal stress as consumers, and labourers struggle to “keep up” with the latest technological advancements.⁸ Innovation in a sustainable model needs to be directed beyond the walls of the corporate cash register and the marketing department. It needs to address the entire product life cycle and focus on the resources not only to create but also to dispose of the product. If innovation ends up in landfill or on roads and beaches, it is not innovation—it is rubbish. Sustainable development requires innovation to define a process that changes production to reduce waste and maintain natural resources.
   Apple, Inc., ranked as the top most innovative company in 2011 by Fast Company,⁹ has an environmental approach that begins at the design stage and provides a comprehensive “cradle-to-grave” approach including a full Life Cycle Assessment. Apple tracks the environmental impact of each product by measuring greenhouse gas emissions for its facilities, the manufacturing process, product packaging, transportation, and customer usage of its products. An environmental report is provided for all products they currently ship. Their recycling programme ‘begins in the design stage, when we create compact, efficient products that require less material to produce. The materials we do use—including arsenic-free glass, high-grade aluminium, and strong polycarbonate—are highly valuable to recyclers, who can reclaim them for use in new products’.¹⁰ These practices enable Apple to drive greater efficiency and develop products that have less impact on the environment.
   Riversimple, a UK-based transport provider with the goal ‘to eliminate the environmental impact of personal transport’ is applying business model innovation to change an entire industry. Riversimple has applied what they are calling ‘whole system design’ to develop a completely new approach to auto manufacturing. This approach looks at the entire system (of business) and optimizes the whole versus focusing on one single subsystem.¹¹
   Today, auto manufacturing is based on a model that generates revenue by “selling more products”. Design and technology are used to sell more products and sell more products more often. By not defining their business as auto manufacturing, the Riversimple model looks to sell mobility as a service—shifting the auto manufacturing model mentality of “sell more products to make more money” to “generate revenue from less product”. The interest of the mobility provider becomes the efficiency, longevity and quality of the vehicle in order to optimize the revenue from each vehicle versus optimizing product sales. Like Muji, Riversimple looks to accomplish their goals via a collaborative innovation environment that is open to the world of designers and engineers.¹²

Concept 3: Measure long-term use value
The real measure of the value of an innovation, or product should be in the long-term life time use value—not share or transactional economic value. Our society of consumerism continually wants and buys the latest, throwing away the “old”. But in an environment of rapid innovation, old becomes younger and younger. Consider the life span of a cellphone—two to five years at the maximum? Nearly 2 billion cell phones were sold in 2007, double the sales number in 2000.¹³ Including the handset, battery and adapter, each represents about one pound of waste that needs to be managed.¹⁴ Add to that all the accessories, whose lifespan is even shorter and it becomes apparent that recycling efforts will have to increase significantly in order to be at all effective. According to Environmental Protection Agency reports, the amount of recycling is increasing, yet the actual percent of what is recycled has remained constant because consumption continues to grow at an ever increasing rate.¹⁵
   By designing for long-term use value rather than short-term profitability, the rate of waste production slows along with the need to produce more and more of the same basic thing. It also means creating a product that is built to last and bringing to market those innovations that make a significant difference—a difference that is worth the overall impact it has across its life time. Wouldn’t it be better to have a cellphone designed with the same principles as a fine Swiss watch? And rather than throwing them away every two years, we pass them along to the next generation who actually longs to use it.
   IWC Schaffhausen has been engineering master timepieces since 1868. The company was founded in Schaffhausen, Switzerland to take advantage of the skilled craftsmen, low wages and location. From the beginning, IWC used invention and innovation to design according to the founder’s ultimate mission: ‘simple but perfect, absolutely reliable mechanical watches for everyday use’. The company began keeping detailed records for every watch that has left the factory since 1885. Since 1885, details of the calibre, materials used and cases have been entered into the records. In the case of later models, the company claims that its service department has the parts and is capable of repairing and maintaining watches from every era since IWC’s foundation in 1868.¹⁶
   Today, IWC is still in Schaffhausen with a few hundred employees. Their timepieces are still produced to the quality goals set at inception with many of its models sought by collectors. Quality, treasured products—products likely to never occupy a landfill.

Concept 4: Quality is a craft
Schumpeter states in Capitalism, Socialism and Democracy that capitalism forced out the artisan and craftsman. ‘The world of the artisan was destroyed primarily by the automatic effects of the competition that came from the capitalist entrepreneur’.¹⁷ Gone with the artisan and craftsman is the passion for producing individual items of quality and moreover, gone is the connection of the producer to the final product. With the assembly line and the “factory” concept (applied even in service organizations today) workers have become more and more disconnected from the final product and from the actual consumer of the product. Rather than one person putting their name on the product and holding accountability, there are now sales organizations that sell, factories that produce, and a whole host of directors driven by their own agendas. In very few cases do sales work in the factory or vice versa. The factory worker has no connection or accountability to the consumer. After all, if there is a problem, the consumer will call the help desk in a low-cost country and be assisted by someone who is “scripted” and has no impact on the design or production of the product. And all sales wants to do is sell. How authentic is that? Yet you will find that many corporations utilizing these practices are also branding themselves as socially responsible.
   In the proposed model, the craftsman is brought back into the picture with the sole responsibility to add more “soul”—to bring back a passion for quality. Quality—not quantity—is the key to sustainability. IWC is one example of the true value of quality. But this also requires that consumers understand the value of quality and change their compulsive buying behaviour. Conscientious brands need to influence conscientious consumption.

Concept 5: Consumer needs are basic
According to Jeffrey Sachs in The End of Poverty: Economic Possibilities of Our Time, ‘the extreme poor and the poor make up about 40 percent of humanity’.¹⁸ He continues, ‘The gulf between today’s rich and poor countries is … a new phenomenon, a yawning gap that opened during the period of modern economic growth … Today’s vast income inequalities illuminate two centuries of highly uneven patterns of economic growth.’ He goes on to explain that this discrepancy is due to the ability of some regions to achieve unprecedented ‘long-term increases in total production’ with technological innovation being the main force behind this achievement.¹⁹ But, at what cost?
   Numerous studies and indices show that human development and satisfaction do not continue to grow with personal expenditures or Gross Domestic Product (GDP).²⁰ ‘Despite high and sustained levels of economic growth in the West over a period of 50 years—growth that has seen average real incomes increase several times over—the mass of people are no more satisfied with their lives now that they were then’.²¹ The Genuine Progress Indicator (GPI), a measure that looks at human development and welfare of a nation in relation to economic progress shows that in fact the ‘well-being’ of Americans has declined even though GDP has increased. Similarly, the Happy Planet Index (HPI) which measures the relative efficiency with which nations convert the planet’s natural resources into long and happy lives for their citizens²² shows a negative correlation between GDP and the changes in HPI. The Index supports the view that ‘Over-consumption in rich countries represents one of the key barriers to sustainable well-being worldwide’.²³
   So although growth is needed to provide 40 per cent of humanity to a standard of living that ensures survival, there appears to be a point where growth no longer provides positive benefits. ‘Growth not only fails to make people contented; it destroys many of the things that do. Growth fosters empty consumerism, degrades the natural environment, weakens social cohesion and corrodes character’.²⁴ This occurs because once basic needs are satisfied, the market and promoters of growth convince us that we need more—more to demonstrate that we are accomplished, that we live a certain lifestyle and that we have meaningful, progressive lives. But meaning does not come from manufactured objects of identity. Moreover, this consumption-based model is not sustainable. It does not positively impact our behaviours, our sense of well-being or the well-being of our society and the planet. Even as global consumption expands without precedence, consumers basic needs are not being met—sanitation, water, food, and happiness.
   The United Nations Millennium Development Goals to cut poverty in half by 2015 are certainly noble. But if the thought is to progress billions of people along the path of the current “high-income”, consumption based countries, the plan is strongly faulted. It has been stated that ‘if everyone in the world were to consume as much as the average consumer in the rich countries we would require four planets the size of earth’.²⁵ Without a change in the culture of capitalism itself, without the development of a more conscientious consumer and society as a whole, the dream of ending poverty may be achievable but totally unsustainable. Such progress will be void of what people really want—happiness.

The role of brand management
To develop the “truly conscientious” brand will require an expansion of brand management’s influence on production, development and areas of innovation. Without some ability to influence the development of products and services, brand management is not managing the brand but simply creating marketing messaging.
   Brand management plays a significant role in influencing consumer behaviour and brand managers have a key role in helping to eliminate those things that drive excessive consumption and social and environmental destruction. Consumption in itself is not a bad thing. Rather it is the increasing rate of consumption by a relatively small part of the global population that puts strain on the environment and forces consumption patterns on others that are not sustainable. Eliminating shallow marketing messaging and “lifestyle” advertising is the first step toward positive change and influencing the development of a conscientious consumer—one that demands quality, eco-efficient products with long-term use value—from all the products that they purchase. The same type of creativity that is applied to developing identities and campaigns needs to be applied to developing products that eliminate wastefulness. The goal is more with less. More meaning, less stuff. More quality, less waste.
   Change has to occur in production and consumption. Corporate social responsibility initiatives typically only address the symptoms and in some cases drive further increases in the rate of production, waste and consumption inequalities. Brand management has the ability to influence both production and consumption, but to do so brand management will also need to change. Brand management has to become the catalyst for sustainable development and an activist for the conscientious consumer. In developing countries, there is great opportunity to create models for sustainable development from which conscientious brands can arise naturally. In developed countries this change will be more challenging but the implications are great. Models to address these challenges deserve further investigation and immediate thought.
   ‘When we’re able to get out of the shell of our small self and see that we are interrelated with everyone and everything, we see that each of our acts affects the whole of humankind, the whole cosmos … Mindful consumption brings about health and healing, for ourselves and our planet.’²⁶

Notes
   1. Our Common Future: Report of the World Commission on Environment and Development. Oxford: Oxford University Press 1987, p. 54. Viewed November 2010, http://www.un-documents.net/ocf-02.htm#I.
   2. S. Harding: Animate Earth: Science, Intuition and Gaia. White River Junction, Vermont: Chelsea Green Publishing Co. 2006; S. L. Hart: Capitalism at the Crossroads: Aligning Business, Earth, and Humanity, 2nd ed. Upper Saddle River, NJ: Wharton School Publishing 2007.
   3. C. Hamilton: Growth Fetish. London: Pluto Press 2004.
   4. T. N. Hanh: The World We Have: a Buddhist Approach to Peace and Ecology. Berkeley, Calif.: Parallax Press 2008.
   5. S. Anderson, et al: Alternatives to Economic Globalization: a Better World Is Possible. San Francisco: Berrett–Koehler Publishers, Inc. 2004; T. Wessels: The Myth of Progress: Toward a Sustainable Future. Lebanon, NH: University Press of New England 2006.
   6. ‘Back to Our Origins, Into the Future’, Muji Global 2010, http://www.muji.com/message/. Viewed November 2010.
   7. ‘Bottled Water’, Container Recycling Institute 2010, http://www.container-recycling.org/issues/bottledwater.htm. Viewed November 2010.
   8. D. Harvey: The Enigma of Capital and the Crises of Capitalism. New York: Oxford University Press.
   9. ‘Most Innovative Companies 2011’, Fast Company, no. 153, March 2011, http://www.fastcompany.com/magazine/153. Viewed March 2011.
   10. ‘Apple and the Environment’, Apple Inc. 2010, http://www.apple.com/environment/. Viewed November 2010.
   11. ‘About us’, Riversimple LLP 2010, http://www.riversimple.com/Content.aspx?type=7&mode=menu&key=136c7243-2378-407e-96cf-750d15de37a8. Viewed November 2010.
   12. Ibid.
   13. Electronics Waste Management in the United States. Washington, DC: Office of Solid Waste, US Environmental Protection Agency 2008, EPA530-R-08-009, p. 11, http://www.epa.gov/osw/conserve/materials/ecycling/docs/app-1.pdf. Viewed November 2010.
   14. B. K. M. Fishbein: Waste in the Wireless World: the Challenge of Cell Phones. New York: Inform, Inc. 2002, p. 23.
   15. Fact Sheet: Management of Electronic Waste in the US. Washington, DC: US Environmental Protection Agency 2008, EPA530-F-08-014, p. 8, http://www.epa.gov/osw/conserve/materials/ecycling/manage.htm. Viewed November 2010.
   16. ‘About IWC’, International Watch Company 2010, http://www.iwc.com/history/. Viewed November 2010.
   17. J. A. Schumpeter: Capitalism, Socialism and Democracy. London: George Allen & Unwin 1976.
   18. J. D. Sachs: The End of Poverty: Economic Possibilities of Our Time. New York: Penguin Books 2005, p. 19.
   19. Ibid., at pp. 28–31.
   20. C. Hamilton, op. cit., at pp. 54–61; S. Harding, op. cit.; J. G. Speth: The Bridge at the Edge of the World: Capitalism, the Environment and Crossing from Crisis to Sustainability. Yale, Conn.: Yale University Press 2008.
   21. C. Hamilton, op. cit., at p. 3.
   22. ‘About the Happy Planet Index’, Happy Planet Index 2·0, 2009, http://www.happyplanetindex.org/learn/. Viewed November 2010.
   23. S. Abdallah, S. Thompson, M. Michaelson, and N. Steuer: The Happy Planet Index 2.0: Why Good Lives Don’t Have to Cost the Earth. London: New Economics Foundation 2009.
   24. C. Hamilton, op. cit.
   25. C. Hamilton, op. cit., at p. 174.
   26. T. N. Hanh, op. cit., at p. 27.

Patrick Harris
thoughtengine
patrick@thoughtengine.co.uk

Mindmap

Erika Uffindell
UffindellWest
erika@uffindellwest.com

Seeing the real opportunities in troubled times

Pick up any business article at the moment and most will tell you that ‘we are living in unparalleled times of change’. But are we really? Are we living through times of unparalleled change or is it just business as usual? As Buddha said – change is the only constant. Change means we move forward. It signals new opportunities and growth. So why are organisations so paralysed by fear?

There’s a strong general feeling that our situation is systemic. That things will never be the same. But what do we really mean by systemic? That it has touched us deeply? So affected our consciousness, that we may change our behaviours, actions or value systems? If so, then surely this unparalleled, systemic change has been good for us as individuals, organisations, the environment and society as a whole…

Fear and faith
The change has rocked many businesses and individuals to the core – forcing us to question how organisations should operate. It’s broken our trust in organisations and people who we held in high esteem. But it has also challenged us to take responsibility for our actions, to reconsider our belief in, and definition of, success, prosperity and growth.

Businesses and individuals have experienced deep fear – many perhaps for the first time in the way that this crisis has affected them. They have contracted their visions and ambitions alongside their workforce. Many are still paralysed, unable to make decisions about their future or trust themselves to step outside their comfort zone and challenge business practice and industry thinking. There’s meeting after meeting about vision, values and common purpose but nothing eventuates. They can’t make a leap of faith as faith has lost its meaning. Fear has stopped them trusting their intuition.

“Life can be compared to a battle field where one must face both visible and invisible enemies. You can fight the visible ones, but the invisible enemies are difficult to conquer because it is almost impossible to fight what one cannot see.

Not only do you need to know your enemies but you also need intuition. Most of us hardly use our intuition because we have not been trained to listen and use our inner ear. Intuition is the guidance of the soul. It is the soul talking to us and guiding us through this jungle and chaos. A person without intuition or inner hearing has neither direction nor command. He or she is tossed around by external factors and sooner or later suffers the consequences of foolish acts.”
Joseph Michael Levry

Ultimately, change is simply what happens to us all, all of the time. The lesson is not in the amount of change we can handle, but in the way we manage that change.

Growth and renewal
We needed this chaos and pain to alert us to what was really important. Many have seen this period as a negative – their way of life and happiness have been badly affected. But we thought we could build , and grow, a society on money, greed and competition without any consequences. Many thought bigger was better. But amidst the chaos a renewal has begun to take place. People have learnt lessons. Things are shifting. Lets hope the lessons learnt are greater than the changes we’ve experienced.

Pain and suffering is a way to grow and become more conscious. Listen to people talking about the future. Most do not want to go back to the old ways of excess and mass consumerism. Instead they’re looking for other means of fulfilment. People still need to feel secure, but many are searching for greater simplicity in their lives as they become more conscious of the role they play in their work place, home life, environment and society. Businesses and brands that fail to recognise this shift in human consciousness simply won’t survive because they won’t be serving the needs of society.

“In 1998 I asked Jack Walsh what it took to have a great company and he said ‘it takes major setbacks and overcoming those’. Then in 2001 we had a near death experience. We went from the most successful company in the world to a company where they questioned the leadership. In 2003 Jack called me up and said ‘John, now you have a great company’. I said ‘Jack, it doesn’t feel like it’. But he was right.”
John T Chambers
Chairman and CEO of Cisco Systems

Through the catharsis of pain people have rediscovered the meaning of – and need for – interdependence and co-creation. They have had to explore the meaning of communication. Heads of state and CEOs around the world have had some difficult lessons to learn and none more than the lesson of humility. Their ego-based approach to building businesses has been challenged. The old way of doing business is no longer appropriate. Humanity has built its own safety net and sent a shock wave of reflection across businesses and nations.

But a new way of working and of being has started to evolve. By sharing their painful experiences, and working together to find a way forward, they’ve let go of their fear. They are realising that once they do this, anything is possible. Creativity is reborn and expansion is possible – not in fiscal terms, but in perspectives, values and future visions.

Dark before the light
Many sages and business gurus did forecast this. Some called it the dark years, a period before the shift in human consciousness can take place. We are in a period where all our karmic lessons that we have been running away from will come back to seek balance. It is a time of far reaching inner transformation and renewal where all our destructive habits must be replaced by new, healthy ones.

Many speak about sustainability and the green agenda shaping the future of our planet but that is only part of it. Our ability to develop our human consciousness in such a way that we do not self-destruct will be the reality of our future. Doing the right thing has never been more important. And this understanding of what is right and wrong for humanity lies deep within in each of us; intuitively our soul has the answer. We just need to take the time to listen. Businesses and brands that understand this and help shape the future will be part of the future. They will reflect the word sustainable in a new way.

Green is the colour
It can be no coincidence that Green is the colour of prosperity – that we’ve labelled our need to heal our planet and provide a sustainable future for generations to come as ‘the green agenda’. For our prosperity is in our ability to live consciously. Our wealth and prosperity will come from this life not from fiscal wealth.

A sense of identity
Most of what has been written above comes down to a simple fact: That organisations and individuals need to have a clear sense of their identity, what they stand for and their intentions in life. Sat Nam is a Sanskrit term meaning ‘the truth of my identity’ (Sat – the truth, Nam – my identity). In Eastern philosophy this mantra is used as the basis for self-actualization and renewal. Leaders now more than ever, need to spend time working out the truth of their brand – what their name will mean to people in the future and how they will live that truth. Employees and customers alike are seeking honesty, transparency, responsibility and respect. We need organisations around the world to lead in a new world order. To recognise that they have a responsibility for how people develop and grow.

“Now is the time for extraordinary leadership”
Dr Rajendra Pachuri IPCC

Branding, at its very foundation, is about creating a clear sense of identity and a strong value system. Values guide and shape an organisation. Organisations do not shape values. And, now more than ever, people are seeking to work for value-based organisations.

It seems inevitable, for those of us that work with brands every day, that they will now support evolution. By their nature brands are evolution. Like living embryos, the ones that flourish are the ones that listen, learn and evolve. The ones that have grown in this crisis have learnt the lesson of humility, of character, of grace. They have also learnt to have confidence in who they are. They have reminded themselves of their core purpose over and above monetary gain. They have sought to find ways to retain their people above delivering profits and economic growth alone.

Where to from here?
We are currently working with a number of global organisations who are exploring their sense of identity, values systems and their vision of the future. It is clear from the conversations that times are changing. That, whilst change is constant, it seems there are moments in history where events have challenged us to rethink our beliefs, our view of ourselves and our role within it. Individuals and organisations are doing just that right now, and they believe that new ways of approaching this work are key. That now is the opportunity to make the right decisions – conscious decisions – that are right for society and humanity as a whole.

“The future is being worked out now, in real time. We are creating a new world order brick by brick”.
Prof George Lakoff

Stanley Moss
DiGanZi
diganzi@gmail.com

In the canon of English-language writings on brands and brand management, few documents possess the stature of the legendary McElroy Memorandum known as “Brand Man”. Authored in 1931 by a a 27-year old Proctor & Gamble promotions executive, it inserted into the practice of brand-building seven directives which shaped our perception of brand’s purpose and function in the ecology of the marketplace. This single manifesto created the modern Brand Manager. For more than seven decades its enduring words were regarded with a reverence like that for the Holy Grail, and perpetrated a set of attitudes which beg to be re-examined in the face of brand world today. McElroy is at heart a strategic marketing document. It prescribed dynamic relationships be instituted within teams, and dictated a rigid hierarchical schema for the organization. Its application helped P&G separate brand managers into parallel teams, with each team competing internally with other brands in the company’s portfolio. Teams were mandated to market their own products to the sales force.

While the youthful Neil McElroy understood a brand to represent a cold-hearted economic entity, such a narrow presumption no longer holds exclusively true. The McElroy memo was simply the first step in codifying brands as instruments of an evolving, organic process. The memo limits its focus to fast-moving consumer goods (FMCG), those rapidly-produced products with short shelf lives, which need to be sold in large quantities in order to be profitable; in this particular category new-product creation factors mightily, competition is uppermost in everyone’s mind, and only good performance guarantees brand survival. Business schools, take heed. If McElroy is the foundation for all brands of the future, then we are in for rough waters. That’s because brands are no longer simply tools of marketing departments, or receptacles which hold psychological levers for creating demand and moving product. The equation has upended. Marketing today is a fraction of the brand equation.

We now understand brands to be deeper, broader, more dimensional entities than ever before. But a look at the memo shows why brands became the distorted commercial entities which later came back to haunt Brand Men, and why the discipline engages in such soul-searching, especially in Post-Globalization world.

McElroy’s point 1 shows us clearly where his priorities stand: he directs his Brand Men to take careful heed of units shipped. In the hierarchy of formalization we are dealing with a classic bean-counter mentality. It’s a short-term, simplistic directive which assesses quantity moved as of primary importance. It implies that sheer numbers dictate the highest imperative for brand evaluation. Nothing else takes precedence. There is no future, only an opportunistic present.

Point 2 instructs the Brand Men to examine carefully where brand development is heavy and “progressive”, an interesting and provocative term, especially taken in its historical context. In 1931 “progressive” might have inferred Communist leanings; today the term smacks of fringe cases at the periphery of political movements, possible techno-libertarians advocating secession from the union, free love and anarchy. McElroy asserts that numerical growth is the highest objective, that Brand Men should apply successful treatment to comparable territories. Today’s brand specialist focuses on greater sensitivity to local culture, and pays more attention to local need before overlaying some proven marketing strategy simply because it has worked to sell product elsewhere.

In point 3, McElroy gives five sub-directives for underperforming brands, what he refers to as “light” brand development. He charges his team to study past advertising and promotional history, then evaluate it in the context of the local territory both on supply and consumer sides. Find out the trouble, he writes mysteriously, employing a vast euphemism. Once the weakness has been uncovered, he counsels, make a plan. It’s a statement of pure brute economics, with managers warned to be certain that money budgeted will produce results. Abide by the corporate hierarchy, he goes on, clear it with the District Manager, get buy-in on the local level. In other words, tell your local manager what to do in his own back yard and tell him how to do it. Get him to agree. Next up: hype the sales force, keep them hammering the territory. Write everything down, document, evaluate, assess. In no place does McElroy ask, Is this product needed, redundant, obsolete? Does somebody else make a better one? Do consumers really want it? What consequences does its consumption carry? In 1931 fewer channels of mass media existed for oversight, there was no conception of a problem with disposability and waste, few corporations thought about notions of community, and the term sustainability would not be coined for 40 years. Listen up, brand managers: the world has changed.

Point 4 pins total responsibility on the Brand Manager for the concise communications connected to his brands. This presumes that anything the organization cares to say about product is apt. There is no reference to accurately reflecting product claims, or any consideration of ethical underpinnings. As long as what is said works, it is permitted.

Point 5 addresses the manufacturer’s expenditure at point-of-purchase, quantifying marketing effectiveness at the retail level. We see no recognition of the universe of stakeholder communities which are touched by a product’s existence. Today we acknowledge that advertising adds to mass sensory overload, a form of pollution in an overcrowded environment. McElroy believes if you put the message in front of the consumer, it will be consumed. This is the fundamental corruption of traditional advertising writ large.

Packaging is addressed, but only superficially, in point 6. The Manager is counseled to experiment with and recommend wrapper revisions. We are again firmly in the terrain of marketing, insisting that the package jump off the shelf, differentiated from its competitors, ramping up the claims, doing anything necessary to grab the impulse-driven buying decision. Not a lot of ethics here, and certainly not abiding by Massimo Vignelli’s famous dictum that “the best packages are invisible.”

By point 7, McElroy is back into his corporate ivory tower, advising his Brand Men to see District Managers a number of times a year to discuss any “faults in promotion.” Here is the crux of the unreality: as long as promotion is correctly tweaked, the brand becomes invulnerable. All hinges on the success of promotion, the product lives in a universe independent of any considerations except its own self-interest. Is it any wonder, with subtext like this, that society drifted into a delusional and mindless consumption-driven consciousness?

History is an odd and elastic commodity, which lurches ahead, but mostly plods along, and we have had seventy years of McElroy’s calculating marketing strategies laying claim to the brand. While McElroy is frozen in time, a kind of Peter Pan of brand theory, brand has grown up around the memo. Brands are our silent partners, devices which deliver inspiration, carry promises, help us create our own identities, and stand as symbols for who we are and what we believe. It’s no longer a case of simply selling more units than your competitors. The challenge for Brand Men today is to reflect an understanding of a bigger world out there than one driven by unenlightened self-interest and short-term profits, and that the time is now to focus on truth-telling, to advocate for the greater good, and to always consider the deeper ethical implications of our commercial conduct.

Jack Yan
Jack Yan & Associates, PO Box 14-368, Wellington 6241, New Zealand
jack.yan@jyanet.com

Executive summary
Detroit has not ever used a brand orientation in its automakers’ marketing strategies, and it talks of trimming brands and numbers to allow it to compete. The author believes in being more focused on brands and not losing economies of scale, and building more of what consumers want. The tools are there, such as consumer-targeted blogs, but manufacturers need to use them.

Introduction
Motown has been in trouble constantly since the 1970s. That time, it was its failure to see how the imports were gradually conquering North American market, and when the Arab-Israeli War forced up fuel prices in 1973, the Japanese were already there with models that had great gas mileage. When the second oil shock happened, US companies were still largely ill equipped. Then-Ford president Lee Iacocca noted that sales of its full-size cars were going up, leaving Detroit’s number two without many economy models.¹ The Japanese won again.

Similar patterns began emerging in the 1990s. Then, Detroit was obsessed with trucks and SUVs. It is generally regarded that there is some financial wisdom behind building these large vehicles, as they generate plenty of profit in an industry where US automakers have massive costs, especially relating to union workers’ pensions and healthcare. But it was becoming obvious to only a few that Detroit was leaving its economy models behind, while the Japanese, once again, were sweeping in with up-to-the-minute variants of their Toyota Corolla and Honda Civic.

The author wrote of this folly at the turn of the century, including DaimlerChrysler’s decision to abandon the low-cost Plymouth marque²—in case low-cost, cheap cars became necessary again. In both these cases, the latest (2008) fuel crisis, driven by high prices and speculation, have proven him right. Detroit is scrambling once again, as it did in the 1970s and early 1980s, wondering how to fix itself. And its ideas smack of repetition—since some of them have been proven to have failed the industry before, in other nations.

The problems are long-term ones that cannot be fixed by short-term adjustments. The truck and SUV obsession was a short-term fix, a quest for profits which Chrysler Corp., in particular, rode very well with its Dodge and Jeep lines in the 1990s. But it left Chrysler weak in passenger cars.³ It is to be expected, however, since Wall Street itself has an obsession: that of the quarterly result. This, however, does not bode well for corporations that have to last generations.

Japan seems to lack this problem as investors are perfectly happy for their companies to see out a longer term. While there are exceptions, Toyota has been mostly left to its own devices, its management opting for a gradual evolution of its strategies, cutting costs of manufacture and appointing westerners to the board. It builds, for instance, the Camry and Corolla in more locations than any one US model.

It would be foolhardy to say that Toyota is impregnable. It has weaknesses, in that its cars are considered the equivalent of domestic appliances: reliable but uninspiring. Detroit had attempted such cars before, often with Japanese input. And it found that these models were not true to the various brands owned by Chrysler, Ford and General Motors.

The brand orientation, which necessitates long-term thinking, is what Detroit needs.

This is a bold statement as GM-watchers may be able to point to a failed era where the company did just that. Buick, Cadillac and other GM divisions were, the company claims, run as brands. But this is not true, at least not branding as most professionals understand it. GM made the classic mistake of equating sales to branding: all it did was to regroup into a geographical sales structure and expected its regional heads to maximize sales.⁴ Little consideration was given to the meaning behind each brand, nor was there feedback from consumers. The experiment was deemed a failure.

Others may also point to the failure Ford has had with its brands, even if it has been credited with being a good brand steward of properties such as Volvo and Aston Martin, two which it had acquired in the 1990s. Jaguar, it is pointed out, was always a division that kept needing investment, never making anything for Ford, despite it paying US$2·5 billion. But there, too, Ford misunderstood the Jaguar brand, lumbering it with passé designs that the marque’s customers did not want. While it never wound up merely badge-engineering Ford cars, it cannot be easily argued that Ford’s failures were due to brand management.

The talk around Detroit is of rationalization and killing off brands, getting its costs and sales more into line. GM, it is argued, may have to be content with being a global number-two, and Toyota can remain in its top spot. Retrenchment seems to be the theme.

It’s true that the Big Three need to leave or at least reconsider sectors where they have not created products that the customer wanted. But are they listening? There are enough tools out there on the blogosphere to show that, for example, Ford buyers would prefer the latest European Focus rather than the model it is currently selling. But only GM has made any headway in blogging and listening directly to consumers’ feedback. Ford is blinded by the fact its old-tech Focus is selling well, without realizing that the same behaviour turned the original Ford Taurus from class leader to a has-been model line in less than a generation.

Most of the techniques have existed for decades. Retrenchment and rationalization were pursued by British Leyland in the 1970s on. The company now exists, other than the Jaguar and Land Rover businesses, as an independent company making one MG model, as a division of Shanghai Automotive Industry Corp. Jaguar and Land Rover are owned by India’s Tata Motors.

Toyota, the darling of the motoring press, particularly for its hybrids, does not pursue retrenchment. It is easily argued that it does not have to. But it has been clever in filling niches and using a minimal number of platforms to create a wide variety of cars—something Detroit’s Big Three were once credited with doing and needs to again. Right now, it’s looking at ways to cement the lead, especially in a cost-cutting programme—in the belief that it’s better to do this calmly than being forced to.⁵

This paper deals first with some of the ideas being bandied about the US auto industry for starters, then groups them into techniques that could save the Big Three.

Troubling thoughts in Detroit
Ingrassia⁶ points out that the Big Three have shed 269,440 employees since 2000 and lost a combined $67 billion in the last three years—and that’s not even counting Chrysler for all 12 months of 2007. But at the same time he points out that Fiat turned itself around and posted record profits. Nissan went from lossmaker to profitable in 2001. Chrysler itself was turned around by Iacocca in the 1980s.

The industry, he says, has at least made moves on the union front, which is one of its biggest hurdles.

But some of the ideas that he has found executives mentioning in Motown show the usual maximize-profits-now mentality that landed the automakers into trouble in the first place.

GM
GM has eight brands, and it is believed, some need to go. In fact, GM has more than eight, once one starts counting Opel, Vauxhall and Holden in its overseas arms. Ingrassia reports very geocentric thinking from Detroit: ‘If you’re shopping for a midpriced sedan, for example, G.M. has six. Buick by itself has two. Toyota, by comparison, has just one—the Camry, which sells nearly as many vehicles each year as all six of G.M.’s offerings combined.’⁷

It’s not totally true. Even in the US, Toyota has a Lexus sedan costing what a well equipped Camry would cost. In its home market, Toyota ?elds more than six mid-priced sedans, selling to a smaller total population. While this is a straw-man argument—foreign automakers have a small share in Japan and Toyota nears 50 per cent⁸—the quantity of entrants in any sector is generally not a problem.

The important thing is that each brand is well defined enough without cannibalization. Ingrassia indicates that GM CEO Rick Wagoner is trying to consolidate sales’ channels without trimming the brand line-up. This makes total sense, because there is nothing that suggests that one manager could not oversee two or three brands. The Japanese have generally kept trim structures for its brands. Toyota itself manages three. Having one divisional head oversee two or three brands can work if there are no favourites and each brand’s positioning is well defined and understood.

The short-term thinking is that Saab, Buick, Pontiac, Hummer and Saturn should die. This is the same thinking at DaimlerChrysler that led to Plymouth’s demise. But it is not the same thinking that led to Oldsmobile’s, a GM division, at the turn of the century.

Oldsmobile became an untenable brand for GM because it occupied a very similar market niche—price-wise and psychographically—as Buick. Purists will be able to nit-pick that argument as there were differences between the buyers: Oldsmobile ones sought American quality and tradition, while Buick ones sought presence without arrogance. However, the reality inside GM was that Oldsmobiles were not really given a distinctive character and given that one of branding’s core tenets is differentiation, the brand had failed.⁹

Plymouth, however, was on its way to becoming a distinctive brand with its own design language. Chrysler had already débuted the Plymouth Prowler, a hot rod acting as a halo car for the brand. The next model, the PT Cruiser, was about to be launched, débuting a retro design. The remaining Plymouths, developed as Dodges with different trim, were given scripted badging that hinted at the brand’s more youthful, lively positioning for the 21st century.

A Plymouth division, had it not been for its cancellation under DaimlerChrysler, would have expressed American youthfulness—the PT Cruiser’s initial success illustrated as much—while Chrysler itself would have remained premium, and Dodge sporty.

Instead, Plymouth products were rolled into the Chrysler marque, confusing that brand—diluting it and forcing a repositioning into a sort of American Volkswagen. At least then it posed no greater threat to some of Mercedes-Benz’s lesser models. But Chrysler lost a distinctive brand with value-leading models—which would have helped it today in an age of high fuel prices. Plymouth had stayed away from SUVs and trucks—a great brand image for 2008.

The brand-trimming argument is what caused BL to kill Triumph’s saloons and MG’s sports cars a generation ago. The thinking was that Triumph and Rover saloons competed in the same sector—based on price, they did.¹⁰ Based on brand, they didn’t. There was similar thinking that led to the closure of MG—because Triumph, it was decided, already had a corporate sports car.

The consequence that played out over decades was that BL’s successors lost their economies of scale.

BL was starved of investment, however, which meant it could not have realistically fielded two identical cars with different badges for long. But it had already made steps to group Austin and Morris together, then Jaguar, Rover and Triumph. One divisional head could have overseen well defined brands, putting a sporting version of one saloon into Triumph’s range, and a traditional one into Rover’s. Experts generally agree today, with hindsight, that the failure to understand the distinctive brand attitudes and brand loyalty behind each BL brand caused credible models to be axed.

Even Toyota has been careful in Japan. It fields, for instance, mid-sized front-wheel-drive sedans such as the Camry and rear-wheel-drive models such as the Mark X. They look fairly similar. But it understands that they appeal to different buyers in a market where consumers are likely to be loyal to model lines in the way US buyers are loyal to brands. If this holds true, then Chevrolet, Saturn and Pontiac can coexist, for example.

There is no need to ape Toyota just because it fields just three brands in the US. No US automaker can afford to rationalize its range to that extent, because none has been able to show that a single American brand can sell twice the volume of two defunct brands. A Chevrolet Cobalt might not be able to fill its own shoes as well as that of a Pontiac G5’s, if Pontiac were to be axed. It’s just as likely that those Pontiac buyers would go to the imports. Historically, did Oldsmobile and Plymouth buyers remain with GM and Chrysler after their parent firms killed them?

Brand axeing should take place in cases of overlap or ill de?nition—and a recent example in Japan would be that of Mazda, which bid farewell to many of the marques it tried to create in the early 1990s (such as E?ni and Eunos).

Saab is a distinctive brand that has been starved of new models for years, but it certainly isn’t in as bad a shape as any of Mazda’s old marques. It has two sedans on Opel Vectra platforms, by themselves not that successful. An SUV was put into the range to stop buyers from leaving the marque. Saab’s problems are not down to a brand that has a strong aircraft heritage, the warmth of Swedish culture and a history of innovation—messages that are still continued in its marketing. Saab’s problems are due to the dearth of new models, which means that it fails as a BMW or Mercedes-Benz rival.

It has no ready overlap in the GM universe, and all the brand really needs are new models. GM has made some headway in putting Saab development with its German company Adam Opel. What it needs Stateside is to look at Saab alongside a non-competing GM brand—and any are compatible. In Australasia, Saab is sold alongside HSV and Hummer, two other premium GM brands.

Modern communications could see a very effective platform engineering programme, which GM is already putting in place anyway. This means one team is working on the Opel Corsa E and Daewoo Gentra replacements, which will be sold in the US as the Chevrolet Aveo successor next decade. GM Europe is working on mid-sized cars such as the Opel Insignia and the next Chevrolet Malibu. And GM’s Australian arm, Holden, created the full-size platform underpinning the Holden Commodore and Chevrolet Camaro.

This programme simply needs to be extended further to creating niche vehicles for Saab as well as replacements for its current range—and there is evidence that GM already got that memo. Buick should benefit from this, too: a Lucerne replacement could easily have been developed alongside the Commodore.

Similar arguments could be made in support of Buick’s presence. While that brand has trimmed models in recent years, what it does field is distinctively styled and its brand, too, is well defined. Sheetmetal might cost money, but the majority of R&D goes into automotive architecture—stuff that customers cannot see. Buick and Hummer appeal to very distinctive buyers who are not catered for elsewhere, and Hummer itself is leading the charge into international markets.

That leaves Pontiac and Saturn, which is already benefiting from globalization. Pontiac fields two rebadged Holdens: a large sedan and a truck. Saturn is becoming the American name for Opel: it can easily go from import-fighter to import-seller, provided it keeps its no-nonsense approach to retail, one of its main differentiating factors.

GM has used the rebadging idea well in some markets. In Britain, most Vauxhalls are really Opels—in most of the range, the model names are even the same. For years, Holden used the same method, though now it rebadges several Daewoo models (Daewoo is another GM brand). There is no reason for Pontiac not to have some Holdens, with the rest of the range selling extreme-performance models made in the US. It would increase economies for Holden. Saturnized Opels would also help Opel in Europe reach greater economies there.

If there is one thing that history has taught us is that tastes are cyclical. Muscle cars may be wrong for 2008 but they may be right for 2012. If Pontiac is killed off, can GM successfully deal with that sector then?

The above are cursory brand analyses only. No one should say that that Saturn’s only differentiator is a no-nonsense retail approach. There are plenty of other reasons that Saturn is distinct from Chevrolet or the other automakers’ brands. And those other reasons, especially considering the buyer, probably won’t overlap as greatly as a mere financial, BL-style analysis would suggest.

In fact, Aaker’s ?ve brand equity targets¹¹ are instructive and it is not impossible to maximize all of them, propelling every GM brand to varying degrees of success. GM and its investors need to remember history and why Britain still has a car industry, just one dominated by Japanese and foreign makes.

GM needs to begin by defining its brands and engaging consumer help to get there. It has a good enough support base via its blog, Fast Lane, to which Bob Lutz, its product czar, contributes. People believe their ideas are being heard and Lutz has been making many of the right moves by enlisting the help of global GM divisions. That can only be enriching to brand equity.

One brand that has escaped criticism for the most part is Cadillac, which has at least sorted its design language and styling out, produced products that Americans (especially style-conscious younger consumers) want,¹² so either GM got lucky—or GM has the skill set already within its company.

GM’s other great asset, which it is finally using now with Lutz’s top-down endorsement (another necessity in branding), is its global divisions.¹³ Each has been made a centre of excellence. Each is part of a greater global structure, entrenched in GM behaviour over decades. Toyota centralizes a lot more of its product development, but GM may be able to have each centre work in tandem and bring products to market more quickly.

Ford
Ingrassia is more optimistic about Ford, which has been slimming down, selling Aston Martin, Jaguar and Land Rover. But he is critical of the company’s product range, and rightly so.

At the time of writing, Ford has been enjoying healthy sales in the US with its Focus compact car. However, car enthusiasts have been critical of this model, since it uses an old platform. Even México has the new-platform model in its range, leading some to disbelieve Ford’s reason that the newer model would be priced too highly to be competitive in the US. (Ford also sells the Mazda 3 in the US at a competitive price, and that is on the newer platform.) Alongside the Honda Civic, the Focus seems old hat.

However, expensive fuel and Ford’s widespread US dealer network have meant that the Focus is being snapped up. Some of this is probably due to brand loyalty, too: those that stuck by the company in the days of the truck and the Explorer SUV are looking at the Focus as a simple, bugs-ironed-out model.

As mentioned earlier, strong sales are not always an indicator of long-term brand strength. Should fuel prices come down and people begin repeating their less considerate, energy-consuming behaviours, will they turn to Ford? Many Taurus buyers did not return to the company when they wanted another mid-sized sedan: they went to Toyota and Honda. There are only so many years that a company can sell an old-platform design, and in the age of the internet, car buyers are more savvy than ever.

Ford has a bright spot, says Ingrassia: its CD338 line of sedans (Ford Fusion, Mercury Milan and Lincoln MKZ). He is right, as these have also managed to be sold in South America as well, as premium models. Using an old (but revised and competitive) Mazda Atenza platform, CD338 was developed with good savings, showing that single platforms can be adapted further. The current Taurus, using a Volvo platform, is another example.

But Ford could trim its platforms further and make use of its international divisions. The Ford Mondeo’s European development duplicated that of CD338, and enthusiasts have been supportive of the European car. Ford is ending the duplication with its next B-sector (supermini) car, the Fiesta, which will be sold in Europe, North America, Asia and Oceania.

Ford’s problems in the past were linked to internal politicking, leading many to dismiss the global model. They cite the CDW27 project of the early 1990s to be an example of a car developed in Europe and failing in the US. Its size was often blamed. The reality was that CDW27 was under-marketed, especially as BMW continued to earn sales in the same size segment.

Facing troubles, and with a new leader in the form of CEO Alan Mulally, Ford may well have realized that being a united company has its benefits.

It could do more, as Australian commentators are quick to point out that their countrymen’s big-car expertise is not used sufficiently. But it does make use of Volvo as a safety centre of excellence, and there are signs of change.

From a branding point of view, Ford may well have sorted things with its core brand, steadily sorting its product range out in what appears to be a medium-term plan leading into the mid-2010s.

It has generally been regarded as a good brand steward for Volvo and Land Rover. Jaguar’s problems were detailed earlier and they seem to have been an (expensive) exception rather than the rule. Aston Martin grew under Ford as well.¹⁴

Volvo has been engineering class-leading platforms for the company, it has a well defined brand centring around safety and Swedish design, and it’s a rare case where the (profitable) status quo should be observed. Mazda is Ford’s sporting brand, and seems to trade well on its Japanese origins and philosophy, with halo cars such as the MX-5 and RX-8.

Its problems rest with Lincoln and Mercury. Lincoln was once a proud brand, but with the demise of the Town Car, no longer fields a large luxury model to rival the large Lexus LS and the top Cadillac. Instead, its models are warmed-over Fords, making sense from a cost perspective. Lincoln buyers are indeed different, brand-wise, from Ford ones. But surely they are discerning enough to notice that what they drive does not look that special?

The good news for Lincoln is that it has downsized, something that it failed to do in the 1970s until GM had already made its move. However, Ford is falling into a trap with cars that do not support the Lincoln brand well, and it can hurt the company in the long run. A brand vision was once developed and show cars built (such as one called the Mark IX), demonstrating a renaissance and a design language for the brand. Little seems to have come of it other than adopting the grille design. It shows short-term thinking and Lincoln is being hurt until it can launch more interesting cars. It seriously needs a brand strategy outlined.

If Lincolns are not special, then what of Mercury—which has languished for over a generation? The brand is nearly invisible, it sells cars that are considered upscale Fords, and the company’s financial problems meant that any distinctive models (such as the Cougar) were cancelled.

Mercury could be fixed if Ford simply examines its Japanese affiliate’s range at Mazda, which develops more models than US consumers see. If the brand were defined as a quality import-fighter, it could have a chance at distancing itself from its warmed-over-Ford image. An obvious candidate for “Mercurization” would be the next Mazda MPV.

Chrysler
Chrysler, the smallest player, is now under a private equity firm’s control and is not particularly well positioned. Once a highly respected company in the 1990s, Chrysler had lean R&D processes, exciting niche models and the admiration of American businesses. Forbes called it the Company of the Year.

This was appealing to Daimler-Benz AG of Stuttgart, which took over Chrysler in the late 1990s. As discussed, the Plymouth marque was a casualty. But the takeover was poor in other areas: there were cultural clashes, the brands were never defined to begin with, and the newly merged DaimlerChrysler found dif?culty getting economies of scale with the platforms. Lean R&D suddenly seemed more cumbersome. And the resignations of many of Chrysler’s old bosses—Bob Eaton, Bob Lutz, François Castaing, inter alia—did not do much for the workforce.¹⁵

Dodge was an easy brand to define, alongside Americanness and sportiness. However, Chrysler went from innovative American luxury—its LH big cars were highly acclaimed, as were their successors—to a sort of Volkswagen, having low-priced models such as the Neon and PT Cruiser sitting uncomfortably with the 300 large car.

Brand-wise, Chrysler is all over the place. Ingrassi is right that the company has not fielded a true luxury car for years. It is cooperating with Chery of China on a small car—which might be too little, too late, when it is launched.¹⁶ And when it is launched, where will it go? It would have been ideal for Plymouth.

Meanwhile, Nissan is building a subcompact for Chrysler in South America. Chrysler is building a minivan for Volkswagen at a Canadian plant.

One scenario is to kill Chrysler off, which would dilute Dodge’s brand—since models such as the Chery joint-venture vehicle will have to be absorbed. It would fit as poorly there in buyers’ minds as the PT Cruiser did with the old LHS and 300M large cars. Dodge, after all, has just released a sports car, the Challenger, a retro-design exercise meant to recall an age when its brand was well defined and proud. The Chery JV model could well look sporty—but if it is an economy model, will Chrysler be tempted to put another marque on it?

Having fewer brands will do Chrysler no favours with its future models. Any disease the parent brand has will simply be passed on. Its saving grace is Jeep, which has not been tarnished greatly; in fact, Chrysler has been quite good at managing that brand and, for the most part, delivering the right product.¹⁷

While it might make some sense to streamline further, buyers make their decisions about a brand quickly. Brands are shortcuts so consumers can grasp their message quickly, hence the need for recognizable brand “attitudes”.¹⁸ And Dodge and Jeep have distinct characters that shouldn’t be tampered with for fear of turning consumers away from that easy recognition and brand equity. Chrysler can be redefined as a quality marque, one with a dose of snob appeal but everyday prices—if it can really deliver that quality. Taking the halo effect of the 300, its most recognizable model, and bringing it on to smaller models isn’t a bad idea—but it remains to be practised.

It will never be a Cadillac rival in the foreseeable future, unless some of those rapid R&D and tight inter-business relationships can return to make it a lean niche-filler. Those glory days weren’t that long ago.

The solutions
First, each of Detroit’s Big Three has some homework to do, in understanding their brands’ visions, what they mean, and what they can mean. They can involve the public via the blogosphere, in a country that has high internet penetration. This will show transparency and a willingness to engage with the American car buyer, whom each company needs to win back. Or, they can do the exercise internally with cross-functional groups, but properly¹⁹—there is no more room for a lip-service nod to branding as there was in the 1990s.

Secondly, the Big Three need to understand just what makes their cars appealing. Aaker’s brand equity elements are a good start but the quest for them needs to be constant.²⁰ The Japanese may have used W. Edwards Deming’s principles over decades to get their quality up. American companies need to leap-frog that by being more engaging, being open where Japanese companies act closed. Continued understanding of consumer tastes via the blogosphere is one method; using that to inform future tastes is another. Feedback is important, and it has only recently played a part in the marcom end of the Big Three. Prior to that it only had customer clinics.

Thirdly, there is an untapped generation, namely the young people who are either too young to drive or getting into their first cars now. What has informed their choices? The author is willing to bet that while there are some who love muscle cars, there may be many more impressed by models that conserve energy.

Fourthly, US automakers are among the heaviest R&D investors—and they need to bring more innovation to the market more rapidly.

Fifthly, they need to realize the effect of a loss of economies of scale. The historical models are there. The key is to build the cars consumers want²¹—something that GM and Ford actually do quite well in Europe. If Levitt is right and there is a homogenization of tastes²²—BMW and Porsche operate on this notion, and Toyota does in the mid-sized and subcompact sectors—then foreign bases need to be used more effectively. It’s not about shutting factories and firing personnel, but being more sincere about delivering for future consumers.

Summary
Killing brands, as any observer of British Leyland has demonstrated, is not a solution when those brands are well defined, contribute to economies and have brand loyalty, recognition and perceived quality. Even if a brand contributes to economies alone, it can be saved through repositioning.

The US automakers need to put in play longer-term thinking. Chrysler is most dire at the moment, and Ford, while leaner, could do more with Lincoln and Mercury. Ford itself has excellent product and needs to show it can overcome regional politics. In neither case should they feel forced in delivering short-term results. In Chrysler’s case it may be able to demonstrate to its owners that it can do well without the pressure of share prices.

General Motors has all the necessary ingredients for survival. It has shown a willingness to engage consumers, find ways of making use of its foreign operations and look at ways of retaining brands and economies of scale.

Being true to their brands can help US automakers get back to a strong position. Setting one’s sights lower and claiming easy victories was certainly not the way Toyota rose to number one. Honda climbed from obscurity to Japan’s number two—and it has one of the US’s top-selling models—by setting higher goals. British Leyland should be a constant reminder of what not to do—unless the Big Three want to wind up being subsidiaries of foreign firms, their marques mere reminders of better times.

Notes
1. L. Iacocca and W. Novak: Iacocca: an Autobiography. New York: Bantam Books 1984.

2. J. Yan: ‘Where Is DaimlerChrysler Heading?’, CAP Online, February 12, 2000, <http://www.jyanet.com/cap/2000/0212ob0.shtml>.

3. J. Flint: ‘Company of the Year: Chrysler’, Forbes, January 13, 1997, pp. 83 ff.; q.v. E. A. Robinson: ‘America’s Most Admired Companies’, Fortune, March 3, 1997, p. F-2.

4. M. Kerbs: ‘G.M. Will Pare as Many as 1,000 White-Collar Jobs’, The New York Times, August 5, 1998.

5. P. O’Connell (ed.): ‘The Man Driving Toyota’, Business Week, July 22, 2005 (also online at <http://www.businessweek.com/bwdaily/dnflash/jul2005/nf20050721_7169_db053.htm>).

6. P. Ingrassia: ‘Who Will Survive?’, Condé Nast Portfolio, June 2008, pp. 86–95.

7. Ibid., at p. 93.

8. I. Rowley: ‘Toyota Set to Top 50% Market Share in Japan’, Business Week, ‘The Auto Beat’, November 1, 2007, <http://www.businessweek.com/autos/autobeat/archives/2007/11/toyota_tops_50.html>.

9. See, e.g., E. Shapiro: ‘Is Oldsmobile Name a Marketing Lemon?’, The New York Times, October 29, 1992.

10. The Triumph brand is owned by BMW, which understands that from a branding perspective, it poses a threat to its core range.

11. D. A. Aaker: Managing Brand Equity. New York: Free Press 1991.

12. J. Yan: ‘The Brand Attitudes of Automobiles’, New Age Branding: Concepts and Cases, vol. 1. Hyderabad: ICFAI Press 2002, pp. 101–13, at pp. 105–6.

13. Remaining divisions such as Cadillac simply need to get the product right: the author understands that its much-lauded CTS sedan, for example, still falls well behind its German rivals on the interior. Meanwhile, Opel does acceptable interiors. This is a single example of GM’s unused assets.

14. J. Yan: ‘The Brand Attitudes of Automobiles’, op. cit., at pp. 111–12.

15. Ibid., at p. 111.

16. Not every company has been successful in cooperating with Red Chinese companies. Chrysler has had some experience with its Beijing Jeep venture, among others, but not with Chery.

17. Some cannibalization has been risked with models such as the Jeep Commander, and its low-end passenger-car spin-offs have questionable appeal for the brand long-term.

18. See, e.g. J. Yan: ‘The Brand Attitudes’, op. cit., and W. Olins as quoted in J. Yan: ‘The Attitude of Identity’, Desktop, October 2000, pp. 26–31.

19. See, e.g. J. Yan: ‘The Brand Attitudes’, ibid.

20. Toyota’s success factors are discussed in ibid., at pp. 108–9.

21. See, e.g. G. Green: ‘Meet the Inspirational, Indefatigable Geoff Polites’, Car, June 2008, pp. 130–3, at p. 132.

22. T. Levitt: ‘The Globalization of Markets’, Harvard Business Review, vol. 61, no. 3, May-June 1992, pp. 92–102; cf. M. Griffin: ‘From Cultural Imperialism to Transnational Commercialization: Shifting Paradigms in International Media Studies’, Global Media Journal, vol. 1, no. 1, fall 2002, <http://lass.calumet.purdue.edu/cca/gmj/fa02/gmj-fa02-grif?n.htm>.

This paper has also appeared in CAP Online.

Thomas Gad
Chairman, The Medinge Group
Founder, Brandflight
thomas.gad@brandflight.com

Stanley Moss
CEO, The Medinge Group
Founder, Diganzi
diganzi@gmail.com

When Scandinavians read news about global warning, it somehow does not feel like news to them. It is more like a repetition of something they have heard and feared for years. A long-standing awareness that environmental protection of unique natural resources was necessary has been under discussion at home for decades. They understood the threats, the consequences of pollution and the price to be paid for damaging the richness and variety in flora and fauna. They knew this in turn would severely change the climatic conditions on earth. How did they know this? Because it was a part of their education at elementary schools in Scandinavia for the last 20 years.

Energy saving in this region has a long history as well. During cold winters, when electricity produced in local clean-water generated power stations was insufficient to cover the demand for electric heating, Scandinavians were forced to buy power often from dirty coal-fuelled power stations in eastern Europe. Events like these were a part of their upbringing and it created a deep-rooted understanding of the issues and consequences. Sustainability has never has been such a dramatic story as it now is in world media. Scandinavians find it rather boring, a presumption they probably share with the Germans. After all, the influential German Green Party was established 1985 and Scandinavia has had its own green parties and powerful political factions for as long as people can remember. Thus, last year’s environmental warnings did not really shake anyone up. People simply shrugged their shoulders and said, it had to happen some day in the face of all the reports about global warming. In essence it was old news to them.

What impresses branding professionals is how powerful the concept brand, ‘Climate Change’, has become and how quickly it developed. Another surprise: how strong the personal brand ‘Al Gore’ has got, certainly more potent than if he had simply become another president of the USA. It does demonstrate to Scandinavians the abiding importance of the USA in world opinion-making. Scandinavians have the conviction that this time climate warnings may finally be for real. There is hope that at least it leads to global action.

Inaction by the rest of the world was precisely the problem previously. Nordic citizens felt alone in their vanguard interest about sustainability issues, ahead of their time. It was they and the Germans and possibly the Californians (with smog-stricken Los Angeles) who concepted the first models of responsible thinking. This perhaps sprung out of the New Age movement, which also emerged in Sweden. Nobody else seemed to take it seriously. Swedes later felt sceptical towards the USA for not signing the Kyoto protocol, an erosion of trust over the inability globally to decrease carbon dioxide emissions. After all, the biggest and most consuming nation in the world had turned its back on the crisis after contributing so significantly to its creation.

Sweden’s responsible environmental consciousness is largely political and grew up in combination with the social-democratic tradition and the idea of a welfare state. Government always takes responsibility in setting the rules for social issues. This may explain one reason for the world’s highest rate of income taxation. In Sweden, this so-called Swedish model has lately been under attack, and the new non-socialist government has it on the agenda to adjust the model, so as not to wreck it all together.

There is still a widespread consensus across all political parties about the fundamental principle of governmental responsibility. This consensus about collective responsibility naturally translates over to Scandinavian brands. Scandinavian companies are good at following the rules. At the same time these are nations with small domestic markets and who need to export to survive. They have always been aware of global competition. Scandinavian industries have complained that the social responsibility they have borne has been excessively one-sided, and that it has made Scandinavian products more expensive. This causes Scandinavian jobs to be threatened. Yet, as there are few changes in the policies, so Scandinavian industry has long been compelled to accommodate the expenses of social and environmental responsibility in its operations and costs.

The Nordic paper industry, a world leader, has manufacturers like SCA and Metsä-Tissue and strong European consumer brands like Lambi, Libero, Libresse, Serla and Katrin. These brands are good examples of companies who not only adjusted to the sustainability rules, but developed environmental policies far beyond what the regulations required. They invested in new technologies to turn dirty production into a cleaner one, for minimal impact on nature.

The strong global sustainability trend has led into more self-critical discussion. Industry and government ask: are the brands and businesses in Scandinavia more progressive than the brands in the rest of the world, or have they lost their competitive advantage? Global attitudes move quickly now. Scandinavian brands feel threatened on their own ideological home turf.

Veckans Affärer, the biggest weekly business magazine in Sweden, published its second yearly “green” issue in 2007. The big question posed concerned national sustainability leadership. They asked: who is leading? The magazine editors concluded that there is a “wait-and-see” attitude in Sweden and in Scandinavia at present. What does the widespread global alarm require companies and brands to do more than they are already doing? And how deep will be government’s role in this new climate? The government in Sweden for the first time in more than a decade leans non-socialist and more liberal, a new political landscape. What exactly will this government do, how much will it regulate, and how much responsibility will it delegate to industry?

Scandinavian brands historically regarded green issues as a way to get PR and nurture better image domestically, but the message was not promoted abroad. Companies felt the public out there did not care that much. Now the situation is different. Most serious companies and brands in Europe have some kind of visible sustainability strategy. Green issues have moved from an “extra” to something “included”. Companies and brands are subjected to greater scrutiny over the reality of their sustainable credentials.

Experts today acknowledge how much more difficult it is to stand out using sustainability as a branding tool. The question is now more one of accountability; what do the companies behind the brands actually do, not simply intend to do?

Today, companies feel a pressure to demonstrate anything, and it can often turn into something resembling a bad joke. When Air France desperately offers a ‘carbon footprint calculator’ prominently on their website home page, so that you can calculate the carbon footprint of your flight with the airline, little can be done with that information. All airlines confront the consequence of a basically dirty technology and no real light at the end of the tunnel.

For a large polluter like an airline, every reduction is a positive one and proper action demonstrates the sustainability of your brand. A good example of this hands-on Scandinavian approach, a kind of imperative to impress the national audience, is Scandinavian Airlines’ (SAS) very successful Green-Landings programme. Advanced communication and coordination between aircraft navigation computers and the computers in the air traffic control system have been developed. This yields the capability to calculate the most environmentally friendly flight path. SAS has already performed over 1,000 green landings, and every landing saves 100 kg of fuel and 200 kg of carbon dioxide. SAS knows that once all its planes systematically participate in the programme carbon dioxide emissions will reduce by 90,000 tons per year, equalling emissions from 20,000 cars driving 15,000 km yearly on average. SAS, after three near-to-crash incidents, is resolutely selling off an entire ?eet of Bombardier de Havilland DASH-7 aircraft, costing the company an estimated €250 million and damaged credit ratings. This is being done to preserve SAS brand equity, for which responsibility, reliability and safety are key values.

Another Swedish brand, H&M, has taken a leading position in sustainability issues and earned a degree of acclaim for it nationally and internationally. The company operates in 28 countries and has more than 60,000 employees all working to the same philosophy: to bring the customer fashion and quality at the best price. The brand is now one of the most identifiable, visible and valuable of Scandinavian marks. H&M has leveraged its brand equity from cheap clothing into fashion brand by co-branding with famous designers like Karl Lagerfeld, Stella McCartney, Victor & Rolf and Roberto Cavalli. Alongside its commercial success, this company demonstrates solid principles of entrepreneurship and a strong sustainability positioning, all the more dif?cult in a business where unnecessary over-consumption, cost-shaving, and issues of ethical production will be the inevitable accusations. H&M has grown into one of the most demanding fashion producers in the world, through determined sustainability policy, hard work, and not just sweet talk.

Today the company stands as a benchmark for the industry. H&M’s active code of conduct encourages compliance with local labour law, statutory pay and working hours, the right to organize and bargain collectively, a ban on child labour, a ban on discrimination, a ban on forced labour, health and safety in the workplace, and compliance with local environmental legislation. All suppliers are monitored by independent auditors. H&M is such a major buyer that this ripple effect has been felt throughout the entire supply side, especially in China. Status as an H&M supplier has become a crucial demand when negotiating production contracts and prices with these suppliers.

Many discussions occur about how to engage the alarming global warming scenario. Scandinavia has a social tradition which encourages state-initiated consensus between politicians and industry, with a reliance on entrepreneurial creativity. This got a boost during the dot-com boom, when mobile phone development, largely achieved by Nordic engineers, resulted in the establishment of world-leading brands Ericsson and Nokia.

Sustainability is not exclusively concerned with environmental questions, but also with issues of public health. Traditional Swedish controls on alcohol, a severe anti-drug policy, high taxes and state-shop-monopoly contradicts the reality that the state owns one of the most high-profile Swedish brands, Absolut Swedish Country Vodka. This brand first began to gain international prominence in New York at the time when Russian vodkas were banned, a response to the Soviet invasion in Afghanistan. The ban came to include the Canadian brand Smirnoff for the simple crime of having a Russian name, thus driving more vodka-drinkers to alternative labels. Propelled by a rise in the global demand for clear spirits, its popularity in gay culture, trendy bars, with the art community, by clever artistic advertising and a clean, almost-medical design, Absolut came to personify the Swedish attributes of purity and political and environmental cleanliness, represented by a bottle. The current Swedish government has put Absolut up for sale, and all the world’s spirit conglomerates are lining up to bid. Some nationalistic Swedish investors would prefer to keep this iconic national brand Swedish.

IKEA was rewarded last year by the international branding think-tank Medinge Group with one of their yearly Brands with a Conscience awards. The award referenced IKEA’s anti-corruption stance, speci?cally citing its business in Russia, where 300 invited guests for the launch of a new Moscow store were unceremoniously turned away from the celebration. Official permits had not been delivered, owing to IKEA’s refusal to pay bribes to the authorities. In Sweden, IKEA’s homeland, the company is considered to be a sustainability leader among Scandinavian brands (together with H&M and Volvo). IKEA’s strict environmental policy aligns closely with founder Ingvar Kamprad’s sparse and lean management principle—no waste in the economics of the business, environmentally or with energy. IKEA took the initiative to promote low-energy products and is today the leading distributor of low-energy light bulbs. ‘Good design for everyone’ is one of the founding principles and the attitude generally is very democratic and Fair Trade-oriented concerning suppliers, employees and customers.

With this much history in place, sustainability in Scandinavia appears equivalent to a hygienic factor, and consequently a bit boring. Once the claims have been made, actions are more important than words. Companies have discovered it is critical to communicate value beyond sustainability itself. A good example of how this works can be seen in instances where organic food and sustainability are considered in tandem. It is not enough to create the impression of responsible conscience with the consumer. One must deliver more to ensure commercial success. With organic food, the good feeling and the perception of better and more natural taste is important. Svenskt Sigill, an ingredient brand for a variety of different Sweden-produced food products, emphasized its Swedish origin and the good taste (‘Home-made’ is the slogan), with greater prominence than the fact that its line is produced to stricter sustainable standards than ordinary food.

The importance of combining sustainability values in the brand with higher product performance can be seen in the Swedish start-up EcoMarine’s ?rst non-toxic biological paint for boats. Toxic paint has long been a problem for environmentalists in Scandinavia. Boating is a uniformly popular pastime; in fact, most households in Sweden have at least one boat, sometimes several. Frequently these are rather large sailing or motor craft. All existing paints for boats are either toxic to repel growth of algæ and sea grass on the hulls, or non-toxic but lack the repelling effect. Toxic paint is forbidden, since it releases amounts of pollutants into the sensitive waters of the Baltic Sea and the otherwise pristine lakes in Sweden. Recently EcoMarine introduced a paint formulated with natural bacteria, which not only keeps algæ and vegetation off the boat hull, but also creates a slimy surface which increases performance and speed of the boat. Environmentally speaking, it decreases the amount of energy needed to drive the boat through the water.

The performance argument is always the winning one. It is a similar position to that which promotes biofuel ethanol, which increases the performance of the bio-powered car, in comparison to gasoline-fuelled engines of the same size. Saab successfully employed this concept in their brand building, until the argument lost some of its lustre when it became widely known that ethanol (although itself non-carbon dioxide-producing) requires objectionable quantities of energy and carbon dioxide emissions to produce and distribute.

The combination of good conscience and good performance is the wave of the future in Scandinavian sustainability innovation and branding. Swedbank-Robur’s highly successful fund management has shown the market-place real dedication to sustainable investments for 15 years. They consistently argued that such investments could perform very well, or at least as well as non-sustainable ones. Swedbank-Robur has proven that a combination of doing good with good financial performance is a winning proposition. Proofs like these of a successful balance between the opposing sides of the sustainability discussion will always make a huge impression on performance and consensus-seeking Scandinavians

This paper has introduced the argument that Swedish brands have moved beyond other countries’ positions on sustainability. There are lessons to be learned here about the implications for other brands. It is clear that non-Swedish brands will follow the same trajectory, raising their awareness of challenges, solutions and consumer attitudes. Countries without the social democratic model may find it more difficult to follow Scandinavia’s lead, but with the volume of alarm raised every day in world media, and the UN’s recent report which documented the urgency of global warming awareness, velocity towards sustainable behaviour can only increase.

Somewhere out in consumer world there is an opportunity to develop an area of research which evaluates the effectiveness of how sustainability incorporates into the real fabric of organizations. This could be a sustainability orientation measure, which considers the extent to which sustainable thinking is central to decision-making. A project done in Sweden called Brand Orientation Index looked at the degree of brand orientation of 500 Swedish companies; perhaps this is the model to replicate on the course to a global sustainability orientation index? Where else but in Sweden will vanguard thought like this occur.

This paper also appeared in the Journal of Brand Management.

Tony Quinlan
Narrate Consulting
tony@narrate.co.uk

Introduction
Let’s begin with clearing up a potential misunderstanding. Storytelling is a misnomer. It conjures up the image of a passive audience sitting listening to someone with the charismatic, persuasive power to entrance them. It revolves around a carefully constructed story designed to carry you out of the day-to-day to somewhere else and change your thinking while you’re there.

To some managers, it sounds like a dream come true. To most of us, however, that would be a nightmare. In an organization, charismatic persuasion and the ability to direct someone’s thinking smacks more of cults and propaganda than modern-day work practices. (And cults are less effective as organizations—they are typically blind and less resilient.) If this was what you were hoping for from this article, please leave those thoughts at the door.

What is on offer here for proponents of employee branding—or “employee engagement”, its more trendy cousin—is more powerful and more positive than that simplistic view. The real power and opportunity for using stories in organizations is in listening to stories, helping others to create their own authentic stories and making sense of the stories told.

Why stories?
Why tell stories in the organization at all? After so much research and honing of practice, good communications departments are skilled at producing clear messages, good copy and straightforward values or mission statements. With such clear direction, good data and evidence of what to do next, shouldn’t that be enough?

Sadly not—because neuroscience shows us that people rarely make decisions on the basis of rational analysis of data at the best of times. And when they are under stress, or being measured against a target, or being asked to change their behaviour, rational argument and values do nothing to persuade them.

Thinking otherwise, though tempting, is trying to lever human behaviour and organizational culture into a process that can be analysed, planned and repeated. We all know from our own experiences that that is patently not the case.

Instead we know, from Gary Klein’s Sources of Power: How People Make Decisions, that people make decisions according to the cognitive patterns they have created in their heads. Indeed, they don’t even make decisions according to the most appropriate pattern, but rather to the first pattern that the perceived situation fits.

These patterns can be viewed as internal, personal stories—and understanding these stories will take us a long way towards understanding patterns of behaviour in the organization. By sharing alternative stories, and helping people see the world through the perspective of a different story, we can open up the possibility for others to shift their worldview and subsequently their behaviour.

A valuable tool in Narrate’s work is the Cynefin framework (Figure 1), created by Dave Snowden, and the concepts behind it. It’s applicable in many different areas, but can be used to distinguish key themes, areas and projects and the recommended approaches to them.

Figure 1
The Cynefin framework

In a vastly simplified description, culture falls into the Complex domain (for a fuller explanation of the Cynefin framework, read ‘The New Dynamics of Strategy: Sense-Making in a Complex and Complicated World’, referenced at the end of this chapter). Here causality is blurred, many different elements combine to create overall effects and results will never repeat exactly.

In this domain, control is impossible, influence essential. Here, patterns of belief and behaviour dominate.

It also requires different actions—trying out certain elements, waiting to perceive the results and then acting to reinforce the emerging patterns or disrupt them if they are negative. It can be about creating boundaries and attractors, by reinforcing desirable behaviours and disrupting undesirable ones.

By contrast, the complicated domain does have repeatable cause-and-effect chains, although these may be extended through various stages. Here, we can analyse or bring in expert help to identify how results are created and impose processes to repeat them. Too often, we have tried to cram employee engagement into this domain.

Given the vagaries of human behaviour and belief, I believe organizational culture sits squarely in the complex domain. I suggest that management—based in process, measurement and hierarchy—is more inclined to sit in the complicated domain.

What is engagement?
Not persuasion, for a start. The desire to see engagement as a one-way communication in which “employees are engaged” is evidence of an old-fashioned mindset—power, decisions and control lie high up the organization. Those further down the hierarchy are tasked mainly to obey. Here, engagement is merely a means of persuading people, while giving an illusion that the choice is theirs.

This view cannot be effective for much longer. Compared with even 10 years ago, people in organizations have changed. The old days of a willing, compliant workforce were an illusion. The truth was always that organizations have no control over people, only levers of influence.

No longer willing to take at face value what’s being told to them by the organization, people have far greater access to information than ever before, and more ways of expressing their own opinions. Equally, they are more experienced at deconstructing any organizational communications—making them masters of cynicism when it comes to the usual parade of internal communications tools and messages.

In the ’80s and ’90s, much of the goal of internal communications (such as it was in those days) was to inspire company loyalty—I still remember being asked why I wasn’t more loyal to the organization. Yet the idea of inspiring loyalty was fundamentally flawed—it’s a two-way thing. Once the organization had proved that it was not loyal to you—as most did repeatedly in those of “downsizing” and “re-engineering”—it became apparent to all but the most hardy company men, that loyalty to the organization was not a long-term secure prospect.

In the ’00s, we’ve abandoned the concept of organizational loyalty, been through internal branding and are now on to engagement—how do we engage our employees? And yet the same applies: engagement is a two-way contract. And while our organizations are very keen to ensure our people are engaged, how engaged is the organization with our people?

Until the organization becomes engaged and concerned about the well-being of its people, engagement is going to be a limited concept—and one doomed to fail in the same manner as loyalty did.

To borrow a truism from knowledge management, ‘Engagement can only be volunteered, not conscripted.” But before that can happen, there must be a level of trust, which itself only arises through a sense of being seen and heard.

Working with stories
Although when I first came to using stories in organizations, it was about crafting stories to communicate particular messages, this is a role that has been almost completely dispensed with as our practice and use of stories has developed.

The Narrate model (Figure 2) sets out the general approach. It begins with a general sense of what the opportunity is, but the first step is then to gather material to map the current perceptions and culture—collecting real, authentic, naturally-told stories. It’s critical to realize that listening to stories emerge is more useful than crafting stories or telling them in the early stages.

No single story will ever give you an accurate picture of the organization—but the patterns that emerge from multiple stories, the shapes of events and beliefs, the archetypical characters that emerge are what provide the most powerful opportunities to view the world as others see it.

Similarly, few single stories will engage with employees. Better, instead, to support them with multiple viewpoints and perspectives on a situation, and then facilitate them understanding their own roles and stories ahead.

Having said that, it’s important to note too that even listening or diagnostic events generate expectations among the audience. Every intervention is a diagnostic and every diagnostic is an intervention.

With all this material, there is then a need for sense-making exercises for key members of the organization. The patterns that emerge may indicate a gap in material which may lead to more story gathering. The patterns may also have implications for the original impetus for the project—which may need reshaping or rescoping as a result.

Figure 2
Process map for narrative engagements

With a greater understanding of the culture and the opportunity or need for engagement, it’s then possible to identify leverage points in the organization where relatively minor actions will produce significantly larger results. At the same time patterns will have emerged that are healthy or unhealthy and these can be reinforced or disrupted as required.

From here, all the range of HR, change and communications’ tools can be brought to bear on the issue—with narrative clearly playing a part within that.

Cognitive patterns
One of the great assumptions of communications is that if we give people clear instructions and data, they will change. That is, we as human beings process information to make decisions. As I mentioned earlier, recent advances in neuroscience show that this is wrong—that instead we make decisions by processing patterns, not information.

This has important connotations for the standard model of internal communications and employee engagement. It nullifies traditional practice of clear messages, well-written copy, etc.

Far less the frequent approach of quantities of data to prove a hypothesis. If we already have a belief about how the world works, it takes significant quantitative and qualitative data to shift that.

Our inclination as human beings is to make the information and data we are given fit our preconceived ideas. It is not until there is significant difference between the data and our model that we open to the possibility of our model being wrong.

So, in communicating effectively—engaging—with people within the organization, we must look for ways to bring their cognitive patterns to awareness. Not to change them, but to allow for the possibility of greater understanding and common negotiation of a shared viewpoint.

As Burns put it:

These cognitive patterns are, from one perspective, simply stories or scripts that predict consequences and inform behaviour and decisions—perspective filters that determine how we see the world.

Data, principles, information are usually context-less
One of the other core reasons for using story is the poverty of traditional value lists and mission statements as communications tools. The following story from Wikipedia about US congressman Lynn Westmoreland demonstrates it beautifully:

Westmoreland appeared on the Better Know a District segment of The Colbert Report on June 14, 2006. Stephen Colbert noted the fact that the congressman has co-sponsored a bill to place the Ten Commandments in the House of Representatives and the Senate. When asked to name all the commandments he was only able to remember three; one, “don’t lie,” was only partially correct (the Ninth Commandment is an injunction against “bearing false witness against your neighbor,” not lying per se). Westmoreland’s press secretary claims Westmoreland actually got up to about seven of the Ten Commandments before petering out, but that part was edited out. Said the secretary, “I challenge anybody outside of the clergy to try to (name them all).”

This reinforces something critical in most organizational communications. The 10 commandments form a solid base for much of the west’s legal, moral and ethical practices, regardless of your personal religion and belief, yet few people can name them.

That list of corporate values, principles or beliefs that has been slaved over for so long and encapsulates the organizational ethos. What are the chances of remembering them? And what are the chances of actually acting on them?

Now, parables and stories on the other hand are memorable, understandable and actionable—because they are more in line with the way our brains and behaviour patterns work. But on the surface, they’re just not as intellectually impressive as ‘Thou shalt make the customer thy God.’

Stories also carry with them context and causality—allowing audiences to determine when and why actions were taken, something that pure principles cannot do, therefore creating the (usually erroneous) assumption that they apply at all times and in all situations. (The reality, of course, is that they don’t apply universally, and most people adopt workarounds when the principles don’t apply. The difficulty, however, becomes when is it acceptable to ignore organizational principles and when is it not? Not is usually the moment just after the work-around has failed and the manager needs a scapegoat.)

An anatomy of stories

What makes up a story?
People talk about stories in organizations frequently, but the object of the discussion is rarely a real example of an influential, appealing story. Too often, it’s a disparate series of supposedly important events that occurred to a faceless group of people. For the sake of those involved, it usually conforms to the standard organization planning process.

In school, we’re taught that a story has a beginning, a middle and an end. This originally came from Aristotle’s poetics, so it seems to be a solid basis for thinking about stories. However, a beginning, a middle and an end also describes a snake, so perhaps it’s not going to give us much idea of what an engaging story really consists of.

A sympathetic lead character
First, engaging stories are about people. Ideally, a single person is the main character in any story. Someone with enough in common with the audience to help them empathise with the character.

Organization stories are too often about groups or divisions or, worse still, the overall organizations themselves. But we don’t engage with these stories because we can’t empathise with how it feels to be a corporation or a group. Where stories are concerned, we need single person protagonists. (There are exceptions—sports supporters being a good example of individuals associating with a national or regional identity.)

A group of people is less interesting than a single person. Someone like me is more interesting than someone unlike me. So, when listening to a story about change, I’ll be more engaged with a story about someone coming to terms with what the change is about, what it might mean day-to-day, what the chances are of being made redundant, how threatened they are at a personal level by the change, rather than a story about meeting stakeholder expectations, returns and principles for the future.

A clear problem
A story without a problem is just a portrait—and not engaging.

In Hollywood, they talk about ‘the inciting incident’—something that means that the setting of the story can no longer remain the same. In an organization, it might mean a takeover threat, a fundamental change in the market, but not “efficiencies”.

The inciting incident must matter to the audience (or at least it must obviously matter to the lead character). Without the impetus of good inciting incident, there is no momentum in the story—and the audience has no reason to care.

Tests and obstacles
One of the greatest flaws in most organizational stories is their sense of being sanitized. A good story proceeds from the problem through challenges and obstacles, making and resolving mistakes along the way. Most corporate stories go straight from problem to resolution in a straight line. The lack of mistakes and real obstacles (as opposed to obstacles that are automatically resolved by a new product we’ve just introduced) is what brands these as propaganda.

In most engaging stories, the obstacles increase in difficulty or complexity as the story goes on—increasing a sense of tension and risk. Interesting, engaging company stories tend to revolve on the “bet-the-company” decisions.

Robert McKee, the screenwriting guru, talks about story events as being meaningful chosen moments that illuminate the entire life of a character. The same applies to stories in organizations—they must be chosen moments that illuminate something deeper about the culture. In particular, a story reveals character in those chosen moments through the choices made by the lead protagonist—especially when they’re under stress.

So finally, a good story will feature a choice made in a moment of pressure—and that is when the reader learns about the real values of the character in the story.

References
G. Klein: Sources of Power. Cambridge: MIT Press 1999.

McKee, Robert; “Story”; Methuen 1999

D. Snowden and C. Kurtz: ‘The New Dynamics of Strategy: Sense-making in a Complex and Complicated World’, IBM Systems Journal, vol. 42, no. 3 (available through www.cognitive-edge.com).

;I. Shah: The Exploits of the Incomparable Mulla Nasruddin. London: Octagon Press 1985
;C. Heath and D. Heath: Made to Stick. New York: Random House 2007.
;H. Gardner: Changing Minds: the Art and Science of Changing Our Own and Other People’s Minds. Harvard, Mass.: Harvard Business School Press 2006.
;E. H. Schein: Organizational Culture and Leadership. Hoboken, NJ: Wiley 2004.

Nicholas Ind
Equilibrium Consulting, pb 5822 Majorstuen, 0308 Oslo, Norway
nind@equilibriumconsulting.com

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The argument of this paper is a simple one: creating value for customers is an organization-wide responsibility. This is a step removed from most approaches to the subject, which see marketing as an instrumental function and give emphasis to marketing as the primary, if not the sole, driver in building a brand. In this line of thinking, marketing is what marketers do to customers when they take what the company produces and re-present it. Yet marketing is not a department but a process by which the organization connects with the world around it. Also marketing theory and practice should not only be concerned with the external and marketing communications but also with the difficult internal reality of aligning the different parts of the organization.

When marketing only has limited organizational influence—when it is disconnected from other activities within the organization—the challenge of delivering a coherent offer is that much harder. Functional areas push in different directions and the appearance, functionality and presentation of the products begins to lack clarity. Alternatively, if marketing is connected with the rest of the organization; indeed if the whole organization is involved in delivering the brand, coherence is much easier to attain.

If this sounds theoretical, this scenario applies to an actual case: the launch of Apple Computer’s strategy based around the metaphor of a ‘digital hub for a digital lifestyle’. This metaphor, announced by Steve Jobs at Macworld 2001 in San Francisco, expressed a new vision for the brand and encompassed several new Apple products: new computers and integrated hardware for recording CDs and DVDs, iTunes and iMovie. Soon afterwards the metaphor heralded the launch of the iPod, Apple’s expansion into audio products and services and the introduction of Apple’s own retail stores.

At the time, Fortune magazine (November 12, 2001) was moved to compare Apple’s success with Intel’s problems: ‘Why in the world would Apple want to jump from the frying pan of the virtually profitless PC industry into the roaring fire of the hypercompetitive consumer electronics business? After all, just a few days before Apple’s splashy introduction of the iPod, Intel announced that it would close down its own disappointing consumer electronics division, which made, among other things, portable MP3 players, digital still cameras, kiddie videocameras, and a much ballyhooed digital microscope. For starters, the iPod fits right into Jobs’ so-called Digital Hub strategy for the Macintosh.’

The vision encapsulated in the strategic metaphor was not only was a driver for internal cohesion so that the organization could focus on those areas that best delivered the idea but it also became a widely used phrase by the media, such that each new service and product innovation launched by Apple was integrated into the metaphor. The whole process thus became a self-reinforcing circular movement that has enabled Apple to be consistently interesting and interestingly consistent.

One of the developments within marketing thinking that has tried to deal with the problem of marketing’s overtly external emphasis which too often leads to disconnected thinking, has been the emergence of the concept of ‘market orientation’. This approach extends the role of marketing by suggesting its role should be not only to sense movement in the environment but also to shape the organizational response by connecting with other business functions and departments. This indicates the role of marketers: to face simultaneously inwards and outwards and connect the organization and its audiences.

The principles of market orientation
Although the underlying ideas of market orientation have been around since the 1960s, it was two pairs of writers in 1990, who began to define and refine the concept: Narver and Slater¹ and Kohli and Jaworski.² Rather than simply focusing on the point of interaction with customers, they turned inward to explore how organizations could use customer knowledge to build organization-wide responses. Kohli and Jaworski saw the concept as referring to ‘the organization-wide generation of market intelligence, dissemination of the intelligence across departments, and organization wide responsiveness to it.’ Narver and Slater (1990) featured some similar elements, seeing market orientation as: (1) customer orientation; (2) competitor orientation; and (3) interfunctional coordination. However, Narver and Slater’s emphasis is on market orientation as organizational culture.

The virtue of market orientation is that it stresses the importance of connecting the organization together to deliver value to customers. It seeks to overcome the problem of siloization that is prevalent in organizations. Jaworski and Kohli in a 1993 paper addressed three specific questions: (1) why are some organizations more market-oriented than others?; (2) what effect does a market orientation have on employees and business performance?; (3) does the linkage between a market orientation and business performance depend on the environmental context? Based on two national samples the researchers came to the conclusion that market orientation is related to top-management emphasis, the risk aversion of top managers, interdepartmental conflict and connectedness, centralization and the reward system orientation. Moreover, a market orientation is related to overall business performance (but not market share), employees’ organizational commitment, and esprit de corps. And even more important, the connection between market orientation and performance appears to be consistent across environmental contexts that suffer from varying degrees of market turbulence, competitive intensity, and technological change. We might conclude from this that there are no environmental reasons to prevent market orientation and plenty of benefits.

Yet there is one area of market orientation that has been underplayed: implementation. A market-oriented culture is not only about interfunctional coordination or the type of organizational factors that enhance or impede the implementation of the business philosophy. Rather market orientation is a consequence (although it in turn reinforces) of a supportive organizational culture, HR and leadership. To develop this line of thinking we have developed the concept of participatory market orientation: a fusion of internal and external market orientations with an emphasis on realising the potential of market orientation.

Participatory Market Orientation (PMO)
A participatory market oriented philosophy aims to help the organization to become more participatory, such that it involves both its employees and customers actively in the process of brand development. This belief in the value of participation should steer the way investments are made in both internal and marketing activities and recognizes their connectivity. It suggests as a principle that rather than an over-reliance on traditional marketing communications to build a brand that funds are allocated to become entrained (synchronized) with customers and to integrate a relevant organizational response encompassing communications and actions.

An example of this entrainment process at work is the Grathak Katha (consumer’s voice) events held by the Bangladeshi mobile operator, GrameenPhone. GrameenPhone is the leading mobile telecom company in Bangladesh with a 48 per cent share of the market and 16·5 million customers (2007). This is a high growth market, but to take account of low incomes, GrameenPhone’s business model is designed to work with customers whose average spend on mobile telephony is $2 per month.

To better understand its customers and develop innovative ways of selling its services, the company conducts regular market research studies into the performance of its brand and particularly the delivery of customer service. However, in addition to this research, GrameenPhone has initiated a process for removing the distance between the company and its customers. This participative approach involves regular meetings between employees and customers in an environment that is both social and businesslike. The idea is to obtain direct interaction with customers both as a way of enhancing the reputation of the brand and as a means of learning about and learning with customers.

At the event itself, GrameenPhone matches the attendees one-to-one with employees so that there is the opportunity for personal dialogue. On these occasions research is conducted and results presented, new products are discussed and customers provide ideas on new opportunities. The idea is to mix the formal and the informal and such has been the momentum behind the process that music performances at the events are by groups that combine employees and customers playing together.

GrameenPhone has discovered that the quality of the feedback is high and the comments are genuine. Customers are not concerned with trying to either attack or please GrameenPhone, they just try to offer input and to relate their experiences. In one year the company conducted more than 300 events with over 200,000 participants. The key to maintaining the interest in the process both within GrameenPhone and externally with customers is the rapid processing of information, the actions taken as a result of input and the feedback provided.

Marketing Director, Rubaba Dowla Matin, argues that the success is due to the organizational capability to validate, categorize, analyse the data and to involve the relevant teams in the organization. It is these cross-functional customer management teams that play the vital role in determining the nature of the insight and generating action and communication. This investment into deep and direct insight and the willingness to encourage organization-wide participation have been the catalysts behind the success of the initiative and the company’s burgeoning reputation as an innovator.

Overall, when such external–internal investments as that made by GrameenPhone are managed effectively it increases its brand equity, which in turn enhances brand value. This final linkage is based on the premise that enhanced awareness and customer loyalty to the brand is the best indicator of the security of future cash flows. This way of thinking goes beyond market orientation because of its explicit link with brand value and because of the emphasis on engaging audiences to ensure that a market orientation leads to effective action.

Marketing’s role then shifts subtlety in this scenario. When the overall organizational goal is to enhance customer value there is a requirement for an organization-wide commitment to customers and a supportive culture, style of leadership, governance and human resources policies. Partly marketing must have an internal market orientation to help achieve this organization-wide perspective and partly it must be a key element in building bonds with customers and sharing knowledge about them inside the organization; externally sense-making and internally sense-sharing. This internal–external approach builds the brand.

The value of this twin perspective is endorsed by a study of Sweden’s 500 largest companies³ that shows organizations with the highest brand orientation index (BOI), where branding is the hub of operations, are characterized by an ability to combine both an internal and external focus. Interestingly, the profile of high brand-orientation companies is found in roughly the same frequency among business to business and business to consumer companies (50–50) and goods to services (57–43). This study reinforces the link between brand orientation and profitability, by demonstrating the correlation between the two with the group of leaders in terms of orientation showing operating profits almost double the lowest brand orientation group: ‘the most important outcome of this study is that we have been able to establish a clear link between brand orientation and profitability: the more brand-oriented a company is, the more profitable it is.’

In spite of the BOI research, most operationalizations of marketing ideas are developed around products and external markets. Yet it should be clear that a focus on human capital and on enhancing brand delivery capacity is of vital importance in delivering customer value in both products and services.

In recognizing the importance of human capital and internal market orientation, it is clear that external market orientation must be kept in focus. It may be important to ensure that employees are truly engaged, but it must be remembered that the value of this engagement is in the delivery of value to customers. Thus the marketing department should cooperate with the HR department in developing the brand, while it should also work at being finance-orientated to improve understanding of the connection between investments in marketing activities and financial performance. Equally, responses to events, such as a change in competitor activity, a move in market share or new patterns of customer behaviour all require the organization to work in an integrated way across internal boundaries. The ability to do this effectively requires a participatory market orientation (an outside-in, inside-out way of thinking). This is something that the organizational culture has to encourage and that leadership must demonstrate by its communications and actions. Something the BOI study endorses with its (not surprising) discovery that in the most brand-oriented companies, the executive management group is very active in brand-related activity.

Notes
1. J. Narver and S. Slater: ‘The Effect of a Market Orientation on Business Profitability’, Journal of Marketing, vol. 54, no. 5, October 1990, pp. 20–35.
2. A. K. Kohli and B. J. Jaworski: ‘Market Orientation: The Construct, Research Propositions, and Managerial Implications’, Journal of Marketing, vol. 54, no. 2, April 1990, pp. 1–18.
3. Brand Orientation Index: a research project on brand orientation and profitability in Sweden’s 500 largest companies. Label AB in cooperation with Frans Melin, 2005.

Adapted from N. Ind and R. Bjerke: Branding Governance. Hoboken, NJ: Wiley 2007.