• by Gord Hotchkiss , Featured Contributor, June 5, 2014

Google has just surpassed Apple as the most valuable brand in the world.

In diving deeper into this news, there are several angles one could take.  If you live at the intersection of brand and technology marketing, as I have for the last several years, this is noteworthy on many levels. Among them are the dramatic shifts in Millward Brown’s assigned brand value for the two companies, with Google soaring 40%, and Apple plunging 20%. According to Millward Brown’s Brandz™ Study, Google’s brand is worth $158 billion, up from $113 billion last year. And the post-Jobs Apple is down to $147 billion from last years $185 billion number-one spot. Combined, that’s an $83 billion swap in valuations. Apple was one of the few brands to actually lose ground in this year’s report.

I personally find this interesting because of some recent research I’ve been doing on corporate strategy for an upcoming book. It comes as a surprise to no one reading this column that I’m a big believer in corporate strategy. But I've been finding  that corporate strategy is a little-understood and over-hyped concept. Actually, let me clarify that: strategy as it’s taught in most MBA programs is little-understood and over-hyped. Executives and consultants pull matrices and strategic frameworks out of thin air, and injudiciously apply them to any and all situations. With all due deference to the Michael Porters, Peter Druckers, Jim Collins and Tom Peters of the world, I suspect corporate strategy is more complex than five universal steps, a four-box matrix, or simple models illustrated with a few circles and arrows. It's a mistaken assumption that all strategic wisdom must flow from top to bottom.

Now back to Apple and Google. Apple, under Jobs, was a traditional hierarchy. More than that, it was a hierarchy ensconced in an ivory tower. Due, no doubt, to the considerable hubris of Mr. Jobs, Apple believed that all good things had to be laboriously squeezed out of their own design process and mercilessly tweaked to perfection.

Google, on the other hand, fully embraces the concept of a market to drive innovation. Notice I say “a market,” not “the market.” Here, I refer to markets as a tool, not an entity. The distinction is important.  Markets are built to facilitate exchanges. They use valuation mechanisms (such as pricing) to protect fairness and introduce equilibrium in the market. In their most ideal form, markets allow any members of the marketplace to contribute and be judged on the value of their contribution, not their status.

In Google’s case, the 20% free time rule, Google Labs and its experimentation with prediction markets all use market dynamics to drive both innovation and corporate strategy. Markets allow for a Darwinian approach to strategy, pulling it up from the bottom rather than driving it down from the top.  And, as evolutionary biologist Leslie Orgel liked to say, “Evolution is cleverer than you are.”

But there are trade-offs. Bottom-up approaches to strategy need some mechanism to pick winners and losers. There needs to be the corporate equivalent of natural selection. This, again, is where markets can help. Without robust and definitive selection tools, the bottoms-up organization can vacillate endlessly, never making any headway. Also, management of execution in bottom-up organizations can be a much more challenging balancing act. Dictatorships might not be a lot of fun for the “dictatees,” but you can definitely get the trains running on time.

Here’s one last thing to keep in mind. Every time we trot out Apple in the era of Steve Jobs as an example of anything to do with corporations, we tend to forget that in the normal distribution of visionary talent, Jobs was an extreme outlier, a once-in-a-generation anomaly. You can’t build a corporate strategy around the hope that you have a Steve Jobs on the executive payroll. Sooner or later, the odds will catch up to you.

Will Apple’s brand value bounce back in 2015? Perhaps. But in the dynamically complex market that is today’s reality, I’d be placing my bets on organizations that have learned to adapt and evolve in complexity.