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(originally published by Booz & Company)


Brand Building, Beyond Marketing

Consumers are becoming more suspicious of traditional branding. Here are five steps to regain their trust.

This article was published by Booz & Company.

Not so long ago, brands were in the limelight. They were seemingly powerful, and virtuous. Any inconvenient truths were hidden by glossy packaging and one-way, big-bang marketing campaigns. Now, as organizations become ever more transparent, people can see behind the marketing facade and are questioning what they are told. Trust in brands has diminished and consumers are more likely to view brands cynically, and to feel uncomfortable with brands’ desire to control. This has created a challenge for many brand owners, because they are ill equipped to cope with greater openness. But the most innovative companies are recognizing the way perceptions are changing, and are adapting their branding strategies accordingly — in some cases, reinventing them entirely.

In the past, it was marketing departments that burnished the products the company produced and made them appealing to customers. But marketers are increasingly turning away from traditional advertising and focusing on direct communications with consumers. (See “The Promise of Private-label Media,” by Matthew Egol, Leslie H. Moeller, and Christopher Vollmer, s+b, Summer 2009.) More broadly, many enlightened organizations are moving branding entirely away from communications and toward connecting strategy, culture, and a wider stakeholder involvement. They recognize that branding is a process that is too important to be left just to the marketing or communications department. These organizations have understood that brand building (even if the terminology of branding is not used) is a participative process involving the whole organization and is the responsibility of all employees. The Netherlands-based finance group Rabobank, for example, which operates in 48 countries and has nearly 60,000 people servicing 9.5 million customers, communicates through traditional media, but it also recognizes that its strength is rooted in its closeness to customers, that its brand is built primarily in the everyday contacts that people inside the bank have with members. It is in this continuous dialogue between customers and employees — both online and offline — that the company’s brand is always evolving. Even the company’s visitor policy for its new headquarters reflects this ideal: Anyone who is accredited by the bank is allowed to wander freely throughout the building.

Similarly, the Danish toy company Lego Group, which we have spent many years researching, has recognized that its brand is not created by the marketing department, but instead by the larger organization in its interactions with customers and other stakeholders who have become part of its community. Like many other organizations, Lego built its business through a controlled approach to intellectual property. It conducted market research to understand how its customers thought about it, developed innovative products based on the information it derived, and created marketing communications campaigns to build the brand. However, as computer games grew in popularity, the company feverishly tried to adapt to new trends and opportunities in the marketplace. The result was that the brand became increasingly irrelevant, as people lost track of what it stood for and confused employees struggled to deliver a trusted Lego experience.

The revitalization of the Lego brand was not a master stroke by the marketing department, but the result of a close dialogue with key stakeholders spearheaded by a new CEO, Jørgen Vig Knudstorp, who took office in 2004. He realized that customers, who were using and adapting — and in some cases infringing upon — the Lego Group’s intellectual property, were not threatening the brand, but were actually redefining it. (See “The Promise (and Perils) of Open Collaboration,” by Andrea Gabor, s+b, Autumn 2009.) One of the secrets of Lego’s ability to engage its stakeholders with the brand is that it took advantage of the small opportunities that emerged along the way: from giving consumers the “right to hack,” to inviting small groups of passionate consumers to headquarters to work with the designers on new ideas, to the new CEO accepting the invitation to talk to the brand community on their turf. Many of these small openings have later had significant implications. By opening itself up to an active involvement with these enthusiasts, the company has been able to tap into a rich vein of innovative thinking and has been able to once again make the brand relevant.

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