Business education - Brand new ideas
Brands are central to the success of many companies and so should be subjected to the same rigour that companies apply to corporate governance. Over the past several years, significant improvements have been made at the operational and strategic...
Brands are central to the success of many companies and so should be subjected to the same rigour that companies apply to corporate governance.
Over the past several years, significant improvements have been made at the operational and strategic levels of brand management. However, it is also critical to pay attention to the governance of a brand, including the integrity of the brand management process and the way in which decisions are made.
There are essential aspects of branding that make it a board level activity and the next Institute of Directors (IoD) module in the Four Seasons series, being held at the Hilton on Saturday morning, addresses the issues through Branding for the Board, which will be delivered by Edwin Ward.
Good governance gives stakeholders confidence that companies operate under good stewardship. In fact, good governance actually adds shareholder value: According to McKinsey, 84 per cent of global institutional investors would pay a premium for shares in a well-governed company.
The confidence that a company is under good stewardship can be misleading if the same sense of confidence does not extend to how their most important assets are managed. For many companies, brands are the engines that drive revenue and are often its most valuable assets. As such, they should be assessed for risk and evaluated in terms of governance principles.
In fact, the growing importance of brands has led to an increasingly sophisticated system of brand management but largely at operational and strategic levels. It is useful to highlight the characteristics and processes of good corporate governance and examine their relevance to the brand management process:
Discipline
Just as boards of directors are encouraged to commit to a disciplined decision-making process, so the principles of rigour and due process should apply to the way in which brand decisions are taken. Disciplined adherence to brand management and stewardship is a crucial first step in brand governance.
Accountability and responsibility
While brand management is increasingly frenetic and involves a complicated system of partnerships with suppliers, it is important that lines of accountability and responsibility are always clear. Who signs off what, what requires the marketing director's approval, and what requires MD level or board approval needs to be agreed and understood.
Risk
While most governance systems suggest companies regularly evaluate risk, brands are not generally specified as a risk worth understanding. This is surprising, given their value to most companies as well as the potential risks associated with brands. While brands are often exposed to crisis risk, they are also vulnerable to less spectacular risk such as under-investment, a lack of innovation or a lack of expertise on the part of brand managers. While growth naturally involves risk, brand managers need to think through the ways in which brand risk is evaluated. Equally, the risk of stagnation or mediocre creative work needs to be understood.
Transparency
While corporate governance is based on transparency in the decision-making process, brand governance should be based on transparency of information. Brand decision makers should have access to comprehensive information systems that enable effective and intelligent decision-making.
Ethics and social responsibility
Today, brands operate in a world that places an increasing premium on ethical compliance and good citizenship. Developing an ethical framework for decision-making and ensuring a high standard of ethical awareness is a key component of brand governance.
Unethical or irresponsible brand management can quickly and permanently destroy value.
Clearly, many of these issues would not be new to most marketing directors. What is new perhaps is a way of seeing the brand marketing system as one that needs to be conceptualised at three levels: an operational level, a strategic level and a governance level.
A well-designed marketing system should be healthy at all three.
Given the growing importance of brands as financial assets and the potential for value destruction, it is important to go beyond operational and strategic brand management and to consider the system of brand management itself, and the way in which we interact and make decisions in brand management.
Hopefully, the concept of brand governance will help marketers think
differently about the assets which they steward.
For more information about Saturday's IoD module, call James Satariano on 9949 5800 or Edwin Ward on 9920 7677.
Over the past several years, significant improvements have been made at the operational and strategic levels of brand management. However, it is also critical to pay attention to the governance of a brand, including the integrity of the brand management process and the way in which decisions are made.
There are essential aspects of branding that make it a board level activity and the next Institute of Directors (IoD) module in the Four Seasons series, being held at the Hilton on Saturday morning, addresses the issues through Branding for the Board, which will be delivered by Edwin Ward.
Good governance gives stakeholders confidence that companies operate under good stewardship. In fact, good governance actually adds shareholder value: According to McKinsey, 84 per cent of global institutional investors would pay a premium for shares in a well-governed company.
The confidence that a company is under good stewardship can be misleading if the same sense of confidence does not extend to how their most important assets are managed. For many companies, brands are the engines that drive revenue and are often its most valuable assets. As such, they should be assessed for risk and evaluated in terms of governance principles.
In fact, the growing importance of brands has led to an increasingly sophisticated system of brand management but largely at operational and strategic levels. It is useful to highlight the characteristics and processes of good corporate governance and examine their relevance to the brand management process:
Discipline
Just as boards of directors are encouraged to commit to a disciplined decision-making process, so the principles of rigour and due process should apply to the way in which brand decisions are taken. Disciplined adherence to brand management and stewardship is a crucial first step in brand governance.
Accountability and responsibility
While brand management is increasingly frenetic and involves a complicated system of partnerships with suppliers, it is important that lines of accountability and responsibility are always clear. Who signs off what, what requires the marketing director's approval, and what requires MD level or board approval needs to be agreed and understood.
Risk
While most governance systems suggest companies regularly evaluate risk, brands are not generally specified as a risk worth understanding. This is surprising, given their value to most companies as well as the potential risks associated with brands. While brands are often exposed to crisis risk, they are also vulnerable to less spectacular risk such as under-investment, a lack of innovation or a lack of expertise on the part of brand managers. While growth naturally involves risk, brand managers need to think through the ways in which brand risk is evaluated. Equally, the risk of stagnation or mediocre creative work needs to be understood.
Transparency
While corporate governance is based on transparency in the decision-making process, brand governance should be based on transparency of information. Brand decision makers should have access to comprehensive information systems that enable effective and intelligent decision-making.
Ethics and social responsibility
Today, brands operate in a world that places an increasing premium on ethical compliance and good citizenship. Developing an ethical framework for decision-making and ensuring a high standard of ethical awareness is a key component of brand governance.
Unethical or irresponsible brand management can quickly and permanently destroy value.
Clearly, many of these issues would not be new to most marketing directors. What is new perhaps is a way of seeing the brand marketing system as one that needs to be conceptualised at three levels: an operational level, a strategic level and a governance level.
A well-designed marketing system should be healthy at all three.
Given the growing importance of brands as financial assets and the potential for value destruction, it is important to go beyond operational and strategic brand management and to consider the system of brand management itself, and the way in which we interact and make decisions in brand management.
Hopefully, the concept of brand governance will help marketers think
differently about the assets which they steward.
For more information about Saturday's IoD module, call James Satariano on 9949 5800 or Edwin Ward on 9920 7677.