Brands succeed when brand principles drive business operations

As I’ve noted previously, brands succeed when brand principles drive business operations. To my mind, the leading brand principle is simple: “The closer you look, the better we look.” This is especially true for banks, proverbial  brands of integrity and trust. Traditionally banks have been stalwart brands of fiscal prudence: solid, reliable and properly cautious. They were brands we could bank on. What made bank brands work was the absolute integrity of bank operations. This was an integrity we could see, feel and trust, from our first step through the massive front doors to the guarded tellers and vaults within. In a bank nothing was left to chance. Bank practices and procedures included layers of sign-ins, sign-offs and sign-outs, double-checks from peers, scrutiny from higher-ups, and a general skeptical gaze.

At least that was the nominal rule until the massive brand failures of banks in the credit crisis and economic collapse of 2008-2010, well documented here. That was ostensibly a “lesson learned.” Bank brands are still recovering.

Brands are built from the inside out. And they die from the inside out.

Brands are built from the inside out. And they die from the inside out. Again, this is especially true for banks. Brands of trust are fragile creatures, even within granite walls and steel vaults. For the bank, brand values are key. They must be baked into every step of bank operations. Brand values are a systematic discipline.  This can be challenge for investment banks with profit-focused trading desks like UBS—and others before it (e.g., the brand flame-out that was Barings)—but the bank really has no choice. Again, it’s either run the bank as a brand, or, ultimately, run it into the ground.

The UBS brand: on the outside looking in

From the reports cited it would appear that the UBS brand suffers from being a brand on the outside looking in, rather than a core driver of UBS operating principles and priorities. The rogue trading in question apparently went undetected for three years, way back to 2008.

Here are key quotes from the first article cited above on the UBS brand failure:

The incident raises questions about the bank’s management and risk policies at a time when it is trying to rebuild its operations and bolster its flagging client base. The case could also bolster the efforts of regulators who have been pushing in some countries to separate trading from private banking and other less risky businesses. …

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“It’s a shock, a real negative surprise,” said Panagiotis Spiliopoulos, head of research at the private bank Vontobel in Zurich. “People thought that after the bank had been revamped following the 2008 crisis, it was set up in a way that could avoid this kind of event.”

Shares of UBS dropped more than 8 percent on Thursday, while the broader European banking sector was up.

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“The question that will be posed is how could this happen given the fact that all banks have committed to reduce proprietary trading,” said Rainer Skierka, an analyst a Sarasin, another private Swiss bank, referring to the practice of firms trading with their own money. “The next question is how the supervisor’s line of control works.”

Brands mitigate risk—when they’re brands of operation

A key value of brands is that they mitigate risk–when they’re brands of operation. Brands mitigate risk by institutionalizing brand values throughout company policies and practices. Brand principles become operating principles, endorsed and enforced. The stronger the brand the less risk a company incurs. A disciplined and systematic brand culture takes root. The brand aims to mitigate risk because it knows that an operating brand breakdown, such as that at failed banks in 2008-2010, or at energy giant BP in the Gulf of Mexico  (see here and here), may lead to catastrophe.

At banks the bottom line is trust

At UBS, and at all banks, the bottom line is trust. No trust, no business. UBS is widely known for its wealth management operations for high net worth individuals. Some of these individuals are worth more than $2 billion UBS just lost. The question now becomes whether doing business with UBS is worth the risk. That is a brand question UBS must answer.

END NOTE: Should investment banks get a brand pass?

One might argue that UBS is primarily an investment bank, and is therefore not a candidate for a prudent, risk-averse brand operation befitting a traditional retail bank, the kind that handles checking and savings accounts for everyday citizens. The investment bank culture, it might be argued, is a high-risk trading culture where big bets are made and big losses tolerated if bigger wins come in. In other words, the trading operation is a brand of risk rather than a brand of prudence. It’s a “casino” more than a “bank.”

Two key factors work against this argument. First, UBS management has tried to institute stricter operating controls following UBS’s near-fatal collapse in the credit meltdown of 2008–2009. Obviously, they need to do more. Second, the prevalence of an undisciplined trading culture argues that it be segregated from normal  banking operations, with the latter fully insulated from the risks of big bets. Such “ring-fencing” proposals are now under government consideration.

If banks can’t manage their brands, regulators will

From the Financial Times: Suspect trades reinforce ringfencing argument

UBS’s maverick transactions have caused too little damage to strain the bank’s stability, though a $2bn write-off could trigger a third-quarter group loss. But the ease with which deluded or dishonest traders can evidently still dodge internal risk limits will reinforce distrust of an investment banking sector where bad legitimate bets are a far greater systemic problem.

Brands are systemic solutions. If banks can’t manage their brands and solve such problems for the social good, regulators undoubtedly will.

A brand precept: discipline before emotion

Thus, this brand precept:

To create great brand emotion you must start with great brand discipline.

Evidence in the field

There’s certainly evidence in the field that many great brands exemplify a disciplined approach that sets them apart. Great brands of automobiles, watches, wines, luxury goods, restaurants and fashion distinguish themselves by great attention to detail—a discipline itself. To compromise would break the brand.

High tech products may not always show an outward brand discipline, especially when they are mass-produced in the millions, but it’s certainly there in the software that makes them satisfy. In software products and services it’s really the brand discipline that holds all those electrons together. If that fails it’s brand over.

Brands are customer-focused applications for getting things done

It’s always been apparent to me that brands are really customer-focused applications–for helping customers get things done–far more than they’re calculated  sets of  symbols, slogans and stories to influence how customers think or feel. (I began writing about personal brand applications way back in 2007.) As I see it, we develop brands to help customers achieve outcomes that they can’t achieve through products and services alone. Thus, a “brand”  is much more than an identity, a stylized sales stimulant, a promise or a reputation. It’s a deliverable that acts as a supra-product method of creating value, limited only by the brand imagination of the company.

Notably, the brand is a form of innovation rather than a belief system or persuasion package. Critically, it’s an interactive application, too, one that enables the brand to team with customers in the value creation process. As I’ll discuss  below, brand  applications are essential building blocks for brand  platforms, and for building strategic brand experiences.

What (exactly) is a brand application?

A brand application is a method (a series of steps, guidelines, interfaces, interactions, innovations and revelations) to advance customers to richer realms of living. It may accompany products and services, or it may be a framework for them. The brand is the operative vision and value stream. It lays out where the company is going, and the rewards for joining in. The brand journey marks the path.

The goal of the application approach is to make customers better off in a way that ultimately disrupts competitors. As part of the application approach we create customers (here and here) through value innovation in ways that competitors can’t match. Our customers win, and so do we.

For strategic purposes the entire brand can be developed as a unified, customer-focused application (as I propose). Within the brand itself, however, there will be many discrete brand applications. These function like brand programs. Customer service is a brand application. A warranty is a brand application. Note, though, that customer service at Zappos is the whole brand as an application.

Brands gain strategic power as applications

Brands gain strategic power when they’re developed as applications. In traditional brand approaches brands are typically a form of communications. They emerge as calculated messages and meanings to promote sales and customer loyalty. In contrast, the brand-as-application is a comprehensive, collaborative, multi-threaded and multifaceted means of helping customers change their world in reality, not “in the mind.” As an application, the brand emerges as a strategic means of action, a change agent and deliverable on par with products and services. As applications brands stand to be far more productive than a brand “essence” showcased as a glorious–yet static–identity.

Your entire brand is an application—inside and outside the company

One of the strengths of the brand application approach is that your brand becomes a coherent and consistent method of value creation inside and outside the company. You are one company, one application, one brand. The brand becomes your operating mode rather than a media construct. As an application it fuses strategic vision, employee creativity, quality, productivity, and desired customer outcomes. Brand applications lay the foundation for a company “Way” of unique vision and values. Conversely, when the brand becomes “image” instead of application, we wind up with sad examples like BP.

A big difference in brand approach

When we develop brands as applications we take a dramatically different approach than used for conventional brands. Here are the main differences:

1. Brands are agents of transformation, a means to change the world. They’re not sets of “meanings” to program customer behavior.
2. The brand goal is to innovate so we can advance customers into richer realms of living where our brand gains market advantage.
3. Our brand is part of our innovation strategy. It’s a method for creating value through customers.  Brand strategy becomes innovation strategy.
4. The brand team joins the innovation team. They pump brand intelligence into new products and services ab ovo.
5. Customers become strategic innovation partners, not just “buyers.” They are valued for their insights, intelligence and initiative far more than for their “loyalty.”
6. There is less need for brand symbols, slogans and stories, and no need for brand magic and miracles. Applications create new realities–an infinitely better result.
7. There is little need to “position” the brand. The application goal is to position customers to win–in new market spaces where customers and company can prosper. The application is self-positioning.
8. The era of the brand icon is over. Icons don’t innovate. Applications do.
9. There is less need for ad agencies. There is more need for app agencies.
10. The brand ceiling leaps skyward. It becomes: Company Potential  X Customer Potential. New brand avenues abound.

Innovative brands already use the application approach

The good news is that many of today’s innovative brands (young and old) already grasp what brands can accomplish as applications. In many respects their brands largely function as end-to-end applications as they focus on delivering market-leading customer experiences. They build their brands outward from their vision, values and core operating principles. Their brands begin as internal applications (operating policies and programs) to produce distinctive  products and  services. Extending brand applications to customers is a natural  follow-through of what makes the company tick. In the larger scheme of things, the brands of Starbucks, Trader Joe’s, FedEx, Costco, Nordstrom and Zappos function as applications. They advance their customers beyond the reach of competitors. They are more focused, more coherent, more disciplined  and more distinctive because of it. And customers can tell the  difference.

How do we implement a brand application approach?

In broad brushstrokes, the generic procedure runs like this:

1. Identify seeds of greatness in your company vision and values. (May take some work.)
2. Ask, “What is holding our customers back?” (Remember: the mission of your brand is to advance your customers so they’re dramatically better off—in markets made possible by your innovative genius.)
3. Put yourself in your customers’ shoes. Ask, “What would I want?” Trust your passion and beliefs. (See vision and values, above.)
4. Map out the innovations needed to advance customers and raise them to the next level. (Hint: listening to music on an iPod is a higher level than listening to a CD.  Creating your own style is a higher level than searching retail racks.)
5. Identify new market spaces where you and your customers can prosper. In these new market spaces your competitors should be irrelevant. That is, they can never advance their customers to the same (real) context.
6. Identify the kinds of customers who will disrupt your competitors. These are the customers your brand must create. They are your competitive weapon.
7. Develop a brand roadmap to the new market space. This is also a customer roadmap toward more proactive and enabled customers.

Advantages of the application approach

As I see it, these are the major advantages of the application approach.

It’s strategic. As an application your brand can advance customers into new market spaces where competitors can’t follow. Brand applications can confer a first mover advantage. Because of their focus, they can also confer domain dominance.

It’s collaborative. The brand-as-application works with customers as it helps move them forward. It learns from them as they learn from it. Brand teamwork replaces messaging, campaigns and passive brand loyalty as the operative connection. Customers are made part of the brand as the brand becomes part of them.

It’s active and dynamic. When structured as an application a brand stops being a static  “thing” and becomes a method to change the world. It breathes adventure, discovery and innovation, and runs on customer feet. It’s made for prototypes, iterations, and strategic touchpoints. Big picture:   Brands are tools that enable customers to inter-operate with the universe. The genius of brands is that they have no limits. The value of  brands is that through them, customers have no limits.

It engages customers directly. To engage a customer is to move the customer forward. There’s no better way to engage a customer than to put a tool in his or her hand, to share their fate, to have their back, and to serve as sidekick, mentor, confidant and guide.

It builds an integral brand backbone, organically. The brand becomes one application internally and externally. It is not a media layer folded back on the business from above, to “align” employees. The unified application gives the brand a singular integrity and backbone, organically. In essence, the brand is an application of what motivates the company to excel. The same application animates and drives employees, partners and customers to create exemplary products and services. The application approach is intrinsically authentic.

It’s infinitely scalable. Your entire brand can be an application, global in reach, and you can have an infinite number of discrete brand applications within it, down to the smallest personal brand application on a smartphone. Those apps can work wonders, too, because they’re personal, portable and persistent. As applications brands can make the most of digital innovations, the very future of brands themselves.

It’s an enabler that doesn’t depend on media campaigns. Brands have evolved from mark, to media, to means. In the application approach brands directly enable customers to be more and to do more. The brand and the customer are on the same page, writing it together. The brand is a framework for teaming, a means of teaming, and a means of execution. In the application approach the brand and the customer campaign together. There’s less need for conventional media campaigns.

It can create value. The original iPod was a nifty device but it made its mark as an application of music acquisition, management and enjoyment. Thanks to iTunes software, the device became a massive music enabler, giving millions of Apple customers personal control of their music, and permanently advancing them beyond the reach of the incumbent music industry, and the random makers of MP3 players.

It is platform enabled. A brand platform is a platform of opportunities for customers. When you structure your brand as an application you open it to complementary applications from customers and other brand partners. Mashups are one example. Mobile apps are another. Your Brand API’s will be vital.

It can disrupt other brands. As an application, a brand can change the game by changing the customer. In effect, the brand application creates customers beyond the reach of incumbent brands. The iPod/iTunes (and iPad) are cases in point.

Brand applications are a big change for brands

When we develop brands as applications we’re making a big change in the context of brands. We’re moving beyond the classic identity model of  brands where the brand was designed to be an idealized proxy for the company, a designated “essence” with programs to radiate calculated meanings to target market segments. In contrast, brand applications are transformative. They represent an action model for brands. They’re the brand as verb, not noun. Identity is important, but it’s what the brand does—to advance customers—that matters most.

We still ask a brand, “Who are you?” and “What do you stand for?” But the big question going forward is, “What have you done for me lately?” Only a brand application can answer that question.

Brand experience and brand applications

When we talk about brand experiences we’re talking about a structure and logic of customer experiences intended to create customers through the brand. In this sense, a brand that delivers structured brand experiences may in fact already be operating with a brand application approach. The only question I might raise is, “What’s the brand agenda?” Are the experiences simply designed to provide more “delight” than those of competitors A, B, and C, leading to a hard-to-win “brand delight race,” (e.g., three mints on a pillow instead of two) or are they strategic experiences designed to move customers into an entirely new space?

Brand applications and service design

The application approach to brands and service design appear to have much in common. I’ll get to this in a follow-up post.

Brand applications and social media

Can brands use social media as their applications? I will tackle this question in a follow-up post.

Brand applications—the brand as visionary enabler

To end this overview I’ll observe that as applications brands assume the role of visionary enabler. The brand must summon the courage to lead where roads are few. This is a daunting challenge. We’re far removed from the brand as pretty face or noble promise. This is the brand that envisions a far better place for customers, and innovates to help them get there against high odds. The brand must have the rare talent to discern high value at the edge of possible, but it must also see through customer eyes.

UPDATE: FAQ: Creating your brand as a customer-focused application.

In brand circles a popular topic these days is “How to curate a brand.” To my mind, however, most of these discussions really have the issue backwards. As I see it, it’s the brand that should be curating the business. In other words,  the best way to “curate” a brand is to manage the business through the brand. This is the only sure way to preserve, protect and grow brand value. We let the brand do the curating—not the other way around. Trying to curate the brand as an (external) layer separate from the business core can be a daunting task, even in the best of times.

If our goal is a brand-driven business, let’s give the brand the wheel.

The brand curates the business

When the brand curates the business the brand rolls up its sleeves and pitches in to help lead decision-making on tactical and strategic levels. The brand and the business are one, fully integrated at the operations level to deliver a premium, sustainable experience. To use a colorful example, that’s how authentic housemade sodas in a Jewish deli (above) can be so delicious. All parts of the business are on the same brand page, crafting it together.

Brand principles drive operations

When the brand curates the business it’s brand principles that drive operations, enabling the company to fully develop the qualities and capabilities that make it special. In this regard, the brand is more method than media, guided by the brand mission and executed by the brand team. Brand values become business values—the optimal platform for long-term success.

Curating the business from S to XL

A brand can curate a business of any size, from small to extra large. In successful small businesses the brand and the business almost always function as one. There’s no reason for large companies to be any different. Apple and Zappos show how it’s done.

Photo credit: Saul’s Restaurant & Delicatessen

Baby Einstein creates a brand trust headache for parent Disney

The New York Times has the story of how the esteemed Disney brand is taking measures to regain brand trust after over-aggressive marketing by its Baby Einstein subsidiary began to take a toll on the Disney brand itself. Disney acquired Baby Einstein in 2001. Baby Einstein’s advertising initially claimed educational benefits from its videos and DVD’s made for infants and toddlers. The claims resulted in a citizen’s group filing a complaint to the FTC alleging deceptive advertising. The FTC eventually dismissed the suit, in part because Baby Einstein scaled back its educational claims.

Separately, a research study at the University of Washington questioned the value of such videos for infant development. Disney defended Baby Einstein from unwarranted conclusions from the study, but currently the American Academy of Pediatrics recommends no TV for infants under two years old.

Disney offers a full refund

To help restore confidence in both the Baby Einstein and Disney brands, Disney has announced a full refund for Baby Einstein videos/DVD’s purchased within the last five years. Disney calls this “The Baby Einstein™ DVD Upgrade / Moneyback Guarantee.” You can read the details in the Participation Guidelines.

The importance of brand due diligence

Any M&A activity calls for brand due diligence, an in-depth assessment of the strategic fit between brands. Brand due diligence entails a close review of brand values and brand vision, and how a brand works to create brand trust. When Disney acquired Baby Einstein in 2001, a program of brand due diligence might have uncovered potential brand risks inherent in Baby Einstein’s marketing claims. The Disney brand might have been spared subsequent public disputes with citizen groups and academic institutions—and a large refund.

Since one martini never seems all that productive, I herewith serve up the second pour of my infamous brand quotes. (Part I is here.)  The purpose of these selective sips is to open minds to a world of brands as deep and rewarding as culture itself.

♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦

Brand sensibility

Brand sensibility is the perceptive power to see untapped value in products and customers, and the creative power to bring that value to life.

Brand builder

A sensible type (see above) who creates new markets by creating new customers—through the brand.

Conventional brand icons are their own worst enemies.

Conventional brand icons are their own worst enemies, trapped in their own rigid molds. They’re sitting ducks for brand iconoclasts, the new non-linear brands that spin up in days to create customers on the fly. The new icon is the stream of value, socialized.

Sustainable brands

Brands fueled by customers.

Brand experience

What the product experience can’t do.

How to determine the context of a brand

To determine the context of a brand, ask what the brand is a “brand of.” For a snapshot answer, simply observe its customers. They tell the truth about a brand.

Brand innovation

Brand innovation is the practice of changing the customer’s world beyond expectations. A brand innovates when it frees customers from the constraints of prevailing brands, or commodities, or conventions.  As a rule, innovative brands make new contributions to culture.

Brand emotion

What brands aim for when they can’t deliver brand experience, or brand value.

Brands as creative engagements

For customers, a brand should be a creative engagement with life, opening doors, revealing truths and enabling new selves to be born.

When the brand is complete, the customer is finished.

Brands must continually reinvent themselves and their customers, or drown in message mire. The brand is a shared, open-ended journey. In the old days, brand essence was set in stone to anchor timeless brand monoliths. No more. Today’s customers move faster than brands. The brand mission is to lead with leaps of meaning. Brands are the new map, and metabolic. Act fast. Think small. And iterate, iterate, iterate.

Brands are code

Brands are code. They are algorithms of adventure, discovery and delight. They are written in a language called CUSTOMER. More here, and especially here.

Brand trust

Brands work for the customer, not the company, and are paid in trust. Brand trust is earned;  there’s no free lunch. Brands that slack get sacked.

Brand relationships begin inside the company

To assess a company’s brand relationships, first observe how that company treats its employees. Companies usually treat their customers like they treat their employees. A proactive company culture is the first step toward a proactive brand culture.

Packaging

The wrapping of products with the need to sell them.

Marketing vs. brands

Marketing targets customers. Brands arm and train them.

Elevator pitch

An elevator pitch is the attention span of money. Brands elevate customers, not pitches.

Brand mission

A brand without a mission is a brand without a prayer. The brand mission is a customer mission to escape commodity culture.

Brand epiphany

Brand epiphany is that magic moment when a customer discovers himself or herself through the brand. The brand is catalyst, and means.

Brand touchpoints

Brand touchpoints put customers in touch with vital parts of their lives. If they don’t, they’re mostly brand gestures.

Photo: Hysterical Bertha — Flickr

The only way to develop a brand is to formulate the brand as a core operating principle of the business. We set aside the brand as a glossy “communication” —or any other kind of fluff— and dial it down to a short and sweet operating brand principle. We then build it out from there.

We situate the brand in the gears and guts of the business

To make this happen we first strip away the outer brand layers. We want to situate the brand in the gears and guts of the business, not in some fabricated haze of “meaning.” So out goes any made-up “brand personality,” any brand campaign bells and whistles, and any brand postures and brand gestures. And we set aside the identity manual and all the existing programs and proclamations. The brand that’s left should be keyed to the very flesh and bone of the business.

The brand as an operating principle of the business

What we’re looking for is a root form of brand vision and commitment that will function as the operating principle of the business. As such, we want it to accomplish three goals:

1. Guide employee attitudes and behavior
2. Guide corporate behavior, internal and external
3. Create a context of visionary innovation that invites productive interactions and relationships with customers, shareholders, the public and other stakeholders

A brand principle of accountability, quality and trust

We can think of this operating brand principle as an ur principle that establishes three critical frameworks for the brand, and the business:

1. A framework for accountability
2. A framework for quality
3. A framework for trust

As you can see, our “back to basics” approach taps into the values that anchor great companies, and great brands. We are transforming the brand from a business communication to a business predicate. The latter will have far greater impact on customers, and on markets.

A principle, not a “promise”

Note that we’re discussing a brand principle, not a brand promise. If your brand principles are strong, you will deliver results that advance your customers. You won’t have to make promises. Promises are cheap, and weak. Your brand principles convey value far more effectively than brand promises. Principles deliver results; promises offer hope. Big difference.

A brand principle geared to create customers

As we never tire of repeating, the goal of every brand is to create the customers that will drive the business forward. We therefore want our operating brand principle to serve as a platform for customer creation. It should deliver results that build the business–from the inside out.

The operating brand principle

At a generic level, I like to work with the following brand principle:

The closer you look, the better we look.

Imagine this as the operating brand principle of your business, ingrained in employees. Can you see a highly-efficient Toyota in place of a fumbling, stumbling GM, Ford or Chrysler?

Of course, some companies can’t handle this principle. It’s a brand with teeth. It scares them. It demands accountability, which may be scarce. They may be more comfortable with a managed look than a closer look–even internally. Or perhaps they’ve divorced their brand from reality. Some may even prefer to hide behind fictions. As a rule, I’d argue that a company that shies away from brand principle of accountability has a serious brand problem, with potentially catastrophic consequences.

Advantages of “The closer you look, the better we look”

I like this principle for the following reasons:

1. It’s short, sweet and memorable.
2. It serves the three goals for an operating brand principle, as noted above.
3. It’s action-oriented. Closer looks are encouraged. If something doesn’t look good on close inspection, it’s supposed to get fixed. Ignoring problems is not tolerated. Mediocrity is not tolerated.
4. It applies to everyone, from the mail clerk to the CEO. It’s a way of being–and doing.
5. It’s a framework for accountability, quality and trust.
6. It makes it easier to create customers.
7. It helps differentiate the company at the core. Brands forged by hype and make-believe can’t compete.

Other options

I’d be the first to admit that this particular operating brand principle may not be the only brand  principle that a company may need. Consider it as a starting point. There’s a cluster of brand principles available. The key factor is that as an operating principle, the brand now works from the heart of the business. That’s where it belongs.

Photo: Alain Bachellier — Flickr