My colleague Gary Lundquist publishes the Colorado Innovation Newsletter, and just about every issue is a thoughtful and interesting essay on an important business topic. With permission, here’s this issue, on branding and innovation, and it’s well worth reading…
Which comes first? The business or its brand? The product or its brand? Silly question, right? Of course the brand comes first. What? Wasn’t that your answer?
I’ll say it again. Brands logically precede businesses and products. Both for good business reasons, and because that’s the way people and teams actually think. They always have the brand in the back of their minds when they innovate.
Perhaps you question my perspective. If so, we may not share the same views on brands and branding. Let’s build some common ground.
Any study of brand, branding, or brand strategy uncovers a very distinct dichotomy. Two camps exist – one relating to symbols and the other to value as defined by customers.
Symbol View: The American Marketing Association and marketing guru Philip Kotler, among others, define a brand as “a name, term, design, symbol or a combination.” With this kind of high profile reinforcement, many practitioners equate “brand” with words and symbols. They believe that companies own brands; that businesses and products should be developed first, then branded; and that brands are built through advertising that connects names to products or businesses.
Value View: Today’s best marketers see brands differently. Businesses own names, but markets own brands. We can write names on paper. Brands are written in the neurons of people’s minds. Names can be brainstormed. Brands must be organically grown. Names are cognitive. Brands are emotional. Names are labels on mental file folders that help people remember information about a product or business. Brands are the relationships that fill those folders with trust, respect, loyalty, track records, and willingness to overlook mistakes.
Names enable recognition. Brands enable relationships. It’s the difference between acquaintance and sweetheart. Between, “I know that name.” and “I know that person.”
A brand is a relationship, not a name. Forget the old definitions. Brands have always been relationships. We build brands by relating to markets, not just by repeating names.
Brands develop around trust. It’s that simple… and that complex. Brands grow around promises made and kept – the core of trust essential to any relationship. Businesses today carefully craft their value promises, then state those promises visibly and audibly. To make very clear who is stating that promise, they use name, logo, slogan, and jingle to connect brand to product and/or business.
Think for a moment. You know value promises. BMW: The Ultimate Driving Machine. Federal Express: Overnight delivery… Guaranteed. You make decisions every day on the basis of value promises you’ve associated with names. You have relationships with companies that are built on your trust in their promises.
Aside from that, why bother with brands? Why not settle for names? … … Brand equity… … That’s why. The durable economic worth of a brand to a company over time.
For any business, brand equity is a source of greater cash flow, faster cash flow, more reliable cash flow, lower cost of sales, lower cost of capital, higher share value, and durable corporate wealth. Powerful brands produce easier sales, repeat purchases, upselling and cross-selling, barriers to competition, easier market expansion, and competitive platforms for higher market impact.
For R&D and other internal innovators, brand equity is a source of greater funding, faster funding, more reliable funding, lower cost of funding campaigns, lower cost of capital, and ability to hire top talent. Powerful lab brands are sources of stronger and more profitable collaborations, greater visibility outside the parent organization, more effective outreach, shorter time to technology transfer, more consistent and rapid application of research results, lower cost of licensing, stronger partner loyalty, and competitive platforms for market impact.
Project teams gain easier funding, repeat funding, new opportunities, barriers to competition, easier expansion into desired project areas, and a platform for higher corporate impact.
Well developed brand equity is a business’s single greatest asset and only truly durable source of wealth. People and products come and go. Facilities degrade and alliances change. Market evolution is dynamic. Only brands have the potential to survive change over time.
The value promise of branding itself is simply this… durable wealth creation.
Still convinced that the business precedes the brand? OK. Let’s think about your business plan and assume that we want to include value promises to key stakeholders (customers, employees, investors, and others). So… what are your promises? Hmmm… … … It isn’t all that easy, is it. We need to know a lot before we can make unique, durable, keep-able promises.
Any business or product plan documents a wide range of decisions. Rather than decide as you plan, consider making and integrating decisions in advance. That is, identify key decisions you’ll need for your plan, then use formal, team-oriented decision processes to reach conclusions. Any time the team is uncertain, you’ve identified a market research task.
One method, Strategic Pre-Planning™, develops functional description, market segmentation, customer descriptions, customer needs, benefits (value received), competitive factors, differentiation, position, and mission. Those results enable choices of business or product name, functional class (functional niche or primary functionality), and slogan. We seek true names, not acronyms, and then give meaning to the name with the class. The slogan then captures essence.
Answers are then integrated into a statement of Strategic Identity™. That synthesis brings out the value promise. For businesses, use the value promise as a powerful criterion for business design. Operations Pre-Planning™ continues the process by setting long term goals and plan-year objectives, then developing strategies to achieve goals by reaching objectives. Strategies structure businesses. Marketing and finance, for instance, are both strategies. They exist to help the business achieve its goals.
For completeness, also Pre-Plan the identity and operation of departments and functions. Each can make value promises to the business and its internal and external stakeholders. That’s right, R&D can brand itself. Remember Bell Labs?
Pre-Planning sets both context and a foundation of decisions for stating your value promise. Anything less can lead to promises that lack relevance, meaning, and impact. Worse, you might make promises you can’t keep. Formal processes enable participation by empowered teams who then have the natural buy-in needed to build larger consensus across the business. Best of all, you’ll have a value promise that will last because the business is designed to honor your promise.
For existing businesses, re-innovate. Ask and answer all the same questions. Refresh your perspectives and your commitments to your stakeholders.
A last thought. Value promises do change as companies grow. Federal Express is now FedEx, and their promise is a way of life for all employees: Absolutely, Positively Whatever It Takes.
Promise-based brands only work when people see both the promises and the way the business honors its commitments. Branding is a corporate strategy for achieving the benefits of accepted brands. Branding thus sits at a par with product innovation (new product development and commercialization) in terms of direct delivery of revenues to the corporate bottom line.
Branding is the very strategic process of persuading market acceptance of and commitment to specific business and/or product brands (value promises). An obvious approach is to hire an advertising firm and do an ad campaign. Such investment leads to high visibility in target markets and significant name recognition.
An alternative would be to hire and work closely with an advertising firm to do a branding campaign. The distinctions are subtle, yet key to building brand equity. I’ll abbreviate as I draw distinctions.
ACs are about what we do. BCs about who we are. ACs about what we offer. BCs about what we promise. ACs promote the business/product. BCs develop relationships. ACs center on the business/product. BCs center on customers and stakeholders.
AC tag lines change with time. BC promises are durable, becoming the face of a range of innovations over time. ACs persuade purchases. BCs develop loyalty. ACs build revenues. BCs grow durable equity. ACs are tactical. BCs are very strategic.
ACs require advertising expertise. BCs can be done by any team with reasonable communication skills and an understanding of relationships.
These distinctions represent the business itself. Ad campaigns represent needs for attention. Brand campaigns represent desires to build long-lasting relationships. Which best represents your business?
Brands logically precede businesses and products, in part, because that’s the way innovators (and even inventors) actually think. We all have ideas that come with, “If we could do that, then…” We may not organize our “then…” around formal value promises, yet we instinctively know why our idea would result in something of value to others.
In precisely the same way, customers have natural expectations of value to be received. Without a value concept, customers simply won’t buy. Nor will investors invest.
Branding taps the natural human need for relationships and forges loyalty far greater than that built by ordinary sales, promotion, advertising, and/or PR. Innovation and branding fit together with a powerful synergy that extends the impact of each.
The time for branding is now, and it always will be.
Check in to the Colorado Innovation Newsletter at Gary’s Blog: Colorado Innovation Blog.
Counterintuitive as it may sound, your logic is correct in many ways. Even when I have found myself coming up with some very innovative new business idea (usually driven by new or new uses of technology) my mind usually shoots off the concept in the shape of a one or two work brand name, which encompasses what the business does. THEN it becomes easier to build the actual business/service/product around it. e.g. NETretary.com for online or net-based secretary services, NetroDollars as e-Currency for online purchases, etc. Of course, the reverse holds true if you stumble upon an innovation (which I am not sure is true innovation unless one was trying innovative things to achieve some new results even if the final results were different yet new and innovative). e.g 3M’s accidental creation of a non-permanent glue and the subsequent Post-It revolution.
All a brand is how well the product solves a problem for a customer. That usability and satisfaction burns its mark on the heart of the consumer: brand.
Brand can then be symbolized by a corporate logo, mascot, fictional character, color scheme, celebrity spokesperson, dress code, social projects, and every other item or event that represents the company.
But a brand cannot be manufactured. It is created in cooperation with the consumer. If your customers agree that the Mac is superior to the PC, then you can say that. If not, say something else to promote the Mac.
It’s what happy customers say about a product that is the true origin of a brand. Not some gestalt that is imposed externally by an agency or consultant.
Spontaneous praise from a satisfied new or long time customer: that’s your brand. That truth about the benefit of product in use: that’s what you can authenticaly sustain as a “brand”.
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Great piece, Dave! All good brands are built around trust, relationships and authenticity and if they resonate, hey – all the better! thanks to you, Van
Yes, trust is the real factor. That’s why people starting online should clearly think of branding themselves as experts in their field to create that needed trust. Once that has been established through interaction and being real with your reader, taking it to the next step, maybe selling them something, is likely to be more successful.