The Great Unseen Business Paradigm Shift: Brand Strategy Leads Business Strategy.The Great Unseen Business Paradigm Shift: Brand Strategy Leads Business Strategy.
Stefan Paul Jaworski, Partner
| Listening to the business news over the last year, one cannot help but notice the many companies that are either in great difficulty or have folded all together. In fact, I have noticed a disproportionate number of companies and brands that have simply “called it a day”; only to have a year or two earlier claimed to be “doubling their business” and making lofty plans for the future. Such aforementioned behaviour is not rare, but seems to be almost a norm it is happening so often- which can be an indicator that something/or some underlying trend is occurring in the market. To me, “that something” is a business “paradigm shift”: a radical, rapid, and encompassing change in the way things are done in the business world. The change behind this most recent business paradigm shift? The reality that after decades of basing business and brand success on such things as operational efficiency, quality, on-time-delivery, ISO, six sigma, synergy, ROI and ROA, re- engineering, and cash flow analysis is that all successful companies and their brands have such business essentials merely as “entry points” or “givens”. The real key to having a successful brand and/or company is basing business strategy on brand strategy. In other words the paradigm shift is: “brand strategy drives business strategy”. A massive change in focus and concept as ever will be seen in business thinking- and usage. 1999, and the world’s most famous maker of jeans is on the ropes- headed for collapse as a business and a brand. The company is Levi Strauss- an organization that had only 2 years earlier gone through a major re-engineering, generating record cash-flows. So how could such a newly fine-tuned financial and operational efficiency machine go nearly bust so quickly? Levis is a prime example of letting business strategy forget the vitals of brand strategy- the belief that all things “efficiency”, “financial” and “operations” are what business is really about. Hence, the dedication to all things “internal” caused the Levis brand to lose focus and insight into the world around it; akin to having a boat on a very large ocean dedicating its time to internal engine workings and efficiencies as opposed to navigation and the complex workings of the sea that really controls its fate. The result: the financial “hotwiring” of the firm was first-class; the brand insight into the market around it was not. Levis failed entirely to notice that many hundreds of small brand jean competitors were steering the market away from its historical leadership in terms of trend-setting style, brand personalities, brand-consumer relationships, and brand, itself. The Levis’ brand had become “your grandfather’s jeans”, while Gasoline, Diesel, Mossimo, Gerbaud, Buffalo, and Guess were “the jeans to be seen in”- literally, “the jean choice of a new jean generation”. The resulting predicament generated one major marketing truth that finally could be seen as a direct cause and effect case: no matter the financial resources, ROI or ROA levels, or the cash flow, Levis and the world learned the power of brand strategy and the fact that it must, for the well-being of any brand, be the driver of even business strategy and planning. The main reason being that the consequences are so significant and potentially far-reaching that they can invoke complete brand failure, including financial failure of both brand and company. It is also accepted that brand strategy focuses on “external”, “long-term”, and “macro” issues that can have critical bearing on overall business success if not discovered or planned for early. In other words, brand strategy involves aspects and considerations that are vital “key drivers” and “feeders” of business strategy. Finally, it is known that a brand can have great financial and cash flow success (*as Levis demonstrated), yet be weak brand-wise. Since the Levis situation, and the formal discovery of the paradigm shift involving brand strategy driving business strategy, one would have assumed that all brands and their leadership have made changes to the way that they operate. In other words, we should be seeing far fewer brands still operating on a model of “business strategy drives brand strategy”. This, however, is not the case. In fact, I have noticed that many brands in trouble stubbornly stick to their guns and try to right themselves via an even greater concentration on operational efficiency and “lean dedication”- at the cost of any brand strategy gains. This reminds me of a definition of insanity I once heard: “doing the same thing over and over again expecting a different result”. An excellent case study I like to use is that of Mazda- a company that had significant operational and lean efficiencies, yet was having trouble becoming a global power in its market. In fact, famed Asian brander Dr. Paul Temporal and SXTC’s CEO tells us that “by the time it was acquired by Ford in 1996 the Mazda brand had nearly faded into oblivion” . It was not financial or manufacturing or lean thinking or on time delivery strengths that would take Mazda to the “next level” (these are simply required as points of entry) as Mazda had these already for years and they had not done much in the past. It would be expert brand strategy driving the business strategy and programs that would make Mazda a global automotive brand player. Dr. Temporal quotes former Mazda senior managing director for marketing, sales, and customer satisfaction, Mark Fields, saying to employees at the start of the process in 1999: “To promote improvement of our market share and build our brand identity, Mazda must completely understand and 1 Temporal, Paul. Advanced Brand Management. Wiley & Sons, 2000. Page 128 satisfy the wants and needs of our target audiences…And we must continue to offer higher value and deeper satisfaction…The key to this is brand strategy… Through our brand strategy, we are aiming at building a brand that differentiates us from our competitors, one that enhances customer satisfaction, improves value- and in the end provides us enduring profitable growth… As we go forward, all of our activity will be keyed on our brand .” Mazda incorporated powerful brand strategy tools and techniques into its very existence as a company that made the difference between failure and success, including : -the acceptance and belief that brand strategy would be the single most important perspective, orientation, and tool that would take the company to the “next level” 2 Temporal, Paul. Advanced Brand Management. Wiley & Sons, 2000. Page 129 as all other media and brand communications vehicles The result? In 2003, Mazda is a successful global automotive brand- far from what it was in 1999. There is no doubt that using only the operational efficiency and financial orientations would have had no where near the positive impact that the brand strategy focus has had. In fact, I believe that had Mazda not taken the “brand strategy driving business strategy” path that it did the company today would be regulated to the backwoods of the automotive market or might not even be here. Further proof that brand strategy drives business strategy. The real point that must be taken from the above is that since the late 1970’s an underlying business success reality has been at play, yet not taken to heart. Business factors that were used to build previous generations of successful companies in the US and globally are indeed still important, yet what has changed is that as opposed to being the key factors that must be first focused on, they are simply “the price of admission”. In other words, they are the minimal, basic costs of entry that every serious player in a market or industry must possess. A given. What must be used to get a company to “the next level” in terms of business success and prosperity, the key driver of longer term survival, is brand strategy- it is the “make or break factor”. Indeed, after years of case analysis and looking at successful and not so successful brands across multiple categories, what has been discovered is that under the very noses of watchful Wall Street analysts, business academics, and business leadership has occurred the Great Unseen Business Paradigm Shift: Brand Strategy Leads Business Strategy. To quote the title of Starbucks’ and Nike’s marketing guru Scott Bedbury: we have entered finally “a New Brand World”.
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