Commentary

Is Brand Strategy A Myth?

On one side of the bookshelf, you have an ever growing pile of historic business best sellers with promising titles like “In Search of Excellence,” “Good to Great” and “Built to Last.” Essentially, they’re all recipes for building a highly effective company — strategic blueprints for success.

On the other side of the bookshelf, you have books like Phil Rosenzweig’s “The Halo Effect.”  He trots out a couple of sobering facts: A rigorous study conducted by Marianne Bertrand at the University of Chicago and Antoinette Schoar at MIT isolated and quantified a leader’s impact on company performance.  The answer, as it turned out, was 4%. That’s right, on the average, even if you have a Jack Welch at the helm, it will only make about 4% difference to the performance of your company.  Four percent is not insignificant, but it’s hardly the earth-shaking importance we tend to credit to leadership.

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The other fact? What if you followed the instructions of a Jim Collins or Tom Peters and transformed your company’s management practices to emulate the winning case studies in these books? That would surely make a difference, wouldn't it? Well, yes – kind of. Here, the number is 10%.  A study done by Nick Bloom of the London School of Economics and Stephen Dorgan at McKinsey tested the association between specific management practices and company performance. There was an association: those practices accounted for about 10% of the total variation in company performance.  

These are hard numbers for me to swallow. I’ve always been a huge believer in strategy. But I’m also a big believer in good research. Rosenzweig’s entire book is dedicated to poking holes in much of the “exhaustive” research we’ve come to rely on as the canonical collection of sound business practices.

He doesn’t disagree with many of the resulting findings. He goes as far as saying they “seem to make sense.” But he stops short of giving them a scientific stamp of endorsement. The reality is, much of what we endorse as sound strategic thinking comes down to luck and the seizing of opportunities. Business is not conducted in a vacuum. It’s conducted in a highly dynamic, competitive environment where there are few absolutes. Everything is relative. And it’s these relative advantages that dictate success or failure.

Rosenzweig’s other point is this: Saying that we just got lucky doesn’t make a very good corporate success story. Humans hate unknowns. We like to assign credit or blame to something we understand. So, we make up stories. We create heroes. We identify villains. We rewrite history to fit into narrative arcs we can identify with. It doesn’t seem right to say that 90% of company performance is due to factors we have no control over. It’s much better to say it came from a well-executed strategy. This is the story told by business best sellers.

So, what caught my eye the other day was a story about how ad agencies might not be very good at creating and executing on brand strategies.

First of all, I’ve never believed that branding should be handled by an agency. Brands are the embodiment of the business. They have to live and breathe at the core of that business.

Secondly, brands are not “created” unilaterally – they emerge from that intersection point where the company and the market meet. We as marketers may go in with a predetermined idea of that brand, but ultimately the brand will become whatever the market interprets it to be. Like business in general, this is a highly dynamic and unpredictable environment.  

I suspect that if we ever found a way to quantify the impact of brand strategy on the ultimate performance of a brand, we’d find that the number would be a lot lower than we thought it would be.  Most of brand success, I suspect, will come down to luck and the seizing of opportunities when they arise.  

I know. That’s probably not the story you wanted to hear.  

7 comments about "Is Brand Strategy A Myth?".
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  1. Steve Baldwin from Didit, July 21, 2015 at 11:32 a.m.

    "Most of brand success, I suspect, will come down to luck and the seizing of opportunities when they arise." Agreed. Commerce is a vast river that narrows along its course. Successful brands know to map the course of this river in advance. It is in the narrows -- not the broad expanses -- where brands can more easily set themselves up as toll-takers in order to charge what the market can bear. 

  2. Mark Scott from Sage Projections, July 21, 2015 at 2:57 p.m.

    Luck plays a role in almost everything in life. It is no different with business sucess.  You need the luck of timing and market environment to have a success.  However, it does not mean you don't need to be prepared to "get lucky".  Branding has suffered the last few years there are not many who really know how to build and maintain a brand. There is less focus on message & brand and too much on the medium. Nevertheless, One thing remains to be true, you can not be succesful if customers are not aware of you.  A well defined brand helps idenity and trust. These continue to be important elements that any businesses should strive for. My advice, spend the time and effort to get your brand right.  It will help when the lucky moment comes along.

  3. Kenneth Hittel from Ken Hittel, July 21, 2015 at 5:03 p.m.

    "Most of brand success, I suspect, will come down to luck and the seizing of opportunities when they arise.  I know. That’s probably not the story you wanted to hear."

    No, it's just the wrong story. You (& your two previous commentors) seem to consider brand only as that story you (or your advertisers) more or less faithfully tell others rather than as, preeminently, the story you, in the brand, in the company, tell yourselves. The brand is your company culture -- it's what you do and, perhaps most importantly, how you do it. So long as what you do remains important to the public, and so long as how you do it remains true to your purpose, your brand, your company will succeed, in spite of lugheads, dumbells, even less than stellar CEOs. "Relative advantages... dictate success or failure." you bet, in spades -- and those relative advantages are nothing less than the contours of your company's culture.

  4. Mark Scott from Sage Projections, July 21, 2015 at 5:56 p.m.

    I think there is some truth in what Ken Hittel says about the importance of company culture. It should guide how the company operates  internally and externally . However, I would not conflate company culture with brand. They are different and they have different roles.  Brand needs to build an identity and trust with customers. Most successful brands are able to achieve that by communicating a proprietary brand message.  A company that makes different products for different customers  such as dog food and cosmetics would be hard pressed to do that within a single brand  message. Trying to make your culture dovetail with your brand messages would soon lead to a very cumbersome and, in my opinion, weaker way to market a product or service.  In this crowded marketplace you better be focussed on building your identity and consumer trust.

  5. James Pereira from Reputation Marketing Coach, July 21, 2015 at 7:08 p.m.

    Thank you for Gord, for stating what people have been hiding from - that ad agencies should not be creating marketing strategies.

    They're ad designers and maybe some are good copywriters. They should be viwed as executers of marketing startegies.

    The marketing dept should be the ones to develop stratagies.

  6. Paula Lynn from Who Else Unlimited, July 21, 2015 at 8:43 p.m.

    This is one for the permanent wall of any business. This is exactly the story I would want to hear from my boss. BTW, at 4% effectiveness would mean that those multi multi million dollar salaries are unnecessary for the "talent". (Sure, you will hear which 4% or for a multi billion dollar business, what's a few million here, a few million there.) Paragraph 6 tells the story of human history.

  7. Nicholas Schiavone from Nicholas P. Schiavone, LLC, July 22, 2015 at 6:46 p.m.

    Dear Gord,


    A very interesting & provocative read! One of the best I've seen in MediaPost. Although I do not concur with the final conclusion, your framing was speculative.

    After years in the field, this branding "business” (i.e., work) seems like wine making. Some things are in your control.  Some not.  How one deals with both is crucial.


    Without engaging in semantics, I believe that Principles, Vision and Execution are more critical to “success & satisfaction” than strategies, ideations and systems when it comes to launching, building and sustaining brands.  The end result is really an ongoing, experiential relationship between a special "customer" (i.e., a person of need or desire) and the product or service provided under the auspices of a special "preparer."(i.e.,  a person of art & science).  It is what I believe the philosopher, theologian Martin Buber referred to as an "I and Thou" Relationship.


    It was Buber who wrote: "Through the Thou a Person Becomes I."  Sounds like branding to me.  In fact, if you closely explore the scholarship  of Dr. Kevin Lane Keller at Dartmouth’s Tuck on "Brand Resonance," one comes to appreciate that effective/efficient branding is the journey from "What about me?" to "What about you and me?"


    Let's allow Buber to close my Comment by perhaps explaining why we all find the laws of nature in branding so challenging to grasp:


    “The world is not comprehensible,


    but it is embraceable:


    through the embracing of one of its beings.”


    Brand strategy is more “philosophy lived” than “strategy studied.”


    Thank you.


    Sincerely,
    Nick


    Nicholas P. Schiavone

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