Lessons in branding from top Asian companies
Many Asian companies represent the gold standard in brand building.
Often, when leaders rush headfirst into brand building for brand building’s sake, they forget to think critically about why having a strong brand is so important. Why should we even care about building a brand? In short, because a brand is the entire organization as seen through the eyes of its stakeholders. It therefore requires a deliberate and resilient commitment to creating value for all stakeholders. It is not new to say that a brand is more than a logo, ad or slogan. But it is new to state that the impact of that effort is determined across four dimensions of value, and leaders are accountable for leading their business and delivering results so that meaningful value is realized. On a purely financial basis, brand value represents 50% of total enterprise value around the world, and total enterprise value is over $70 trillion, according to 2016 research by BrandFinance, which placed global brand value at roughly $35 trillion. Yet, time and again, too many organizations and their leaders fail to do the deliberate hard work necessary to realize their brand potential. Instead, impatience – and even a willful disregard for supporting the agility and perseverance required to test and refine brand-building ideas – often short-circuits promising efforts. If Roger Federer misses a shot during a match, he does not give up and walk off the court, ending the match prematurely to cut his losses and ‘protect’ the games he has already won. Such behaviour would diminish his reputation and overall value. Instead, he adjusts, tests and probes, learning in real time. Does he always win? Of course not. And nor do companies in their brand-building efforts.
In business, impatience drives short-termism, a narrow-minded focus on a bewildering array of key performance indicators (KPIs) that, when pursued, can drive counterproductive outcomes. Why does this happen? As a company grows, protecting gains takes precedence, and avoiding uncertainty and risk increasingly dominates decision-making. This creates a contradiction: how to grow, since playing it safe is rarely a winning long-term strategy for brand success? New growth opportunities are inherently risky, but they cannot be avoided if leaders want to create meaningful brand value for their stakeholders.
There have been significant shifts in how management invests in and builds brands. Brands can no longer be built, or succeed, based on command-and-control efforts from headquarters. Companies can control operations and quality, but they cannot control opinion or perception. Power and influence is dispersed among key stakeholders (notably customers). Brands that once took decades to build can now be undone in a matter of a few tweets over a few hours. In this hyperdynamic environment, where does that leave leaders and their organizations?
Four brand value dimensions
Asia represents over 40% of the global economy, so the influence and impact of Asian companies is growing disproportionately. Let’s look at examples through the four brand value dimensions:
1. Reputational value
Reputation is trust. The absence of trust means all other dimensions of value are worthless.
In most Asian cultures, trust at the individual level is built through elaborate interpersonal and professional practices and routines that – over time – demonstrate a person is genuine and reliable. At the company level, trust is generated when customers gain more than they expect from the performance of the offerings they buy. This includes an expectation that the company operates responsibly toward their workers and contributes meaningfully to the communities it serves. As the Reputation Institute’s report 2017 Global RepTrak 100 summarizes: “Companies that are more open, more genuine, and communicate more often have far stronger reputations.” Look no further than Emirates Airlines and the remarkably consistent positive feedback from its customers. Emirates has grown quickly to attain reputational success, and has been named ‘World’s Best Airline’ four times since the awards were first introduced in 2001, most recently in 2016, and has won ‘World’s Best Inflight Entertainment’ for 13 consecutive years, including 2017. Emirates’ success is not from clever marketing programmes and beguiling advertising messages, since any failure to deliver on expectations would quickly lead to distrust if customers’ experiences were worse than expected. Emirates has built trust over its corporate life through a conscientious investment in service excellence (whether digital or in-person), product quality (from lounges to aircraft), and commitment to follow through (from punctual flights to quick baggage delivery to resolving customer problems efficiently and effectively).
2. Organizational value
This is internal, and is an indicator that employees feel they are part of something special and connected to a larger cause. Such belief inspires discretionary effort. In effect, people will work better and more effectively if they believe their work matters and is aligned to the organization’s values. Shinhan Bank of Korea has garnered recognition for being one of Asia’s top places to work, a remarkable turnaround from 2010 when the bank suffered from internal corruption scandals. To overcome the negative implications from the scandals, Shinhan had to restore trust and confidence with employees and customers. Dongwoo Han took over as chief executive and chairman from 2011 to March 2017, and embarked on an employee– and customer-centric set of programmes to strengthen ethical management, inspire a culture of mutual respect and work-life balance, and contribute to the development of local communities. In 2017, Shinhan rose to #1 in the ‘Best Workplaces in Asia’ rankings. As global organizational research and training consultancy Great Place to Work states: “These workplaces are distinguished by their extraordinary levels of trust, pride, and camaraderie.”
Roongrote Rangsiyopash is chief executive of Siam Cement Group (SCG) in Thailand. As the construction and chemicals industries undergo massive transformation due to rapid technological change, he has emphasized the importance of inspiring employees to rally around a common cause of being prepared today for a radically different tomorrow, including embracing a far more digital future. While he does not have a crystal ball to tell him precisely what a more digitally savvy future entails, he is clear that “doing nothing is a recipe for failure and we must act now to be more digital, faster, innovative and open-minded if we are to succeed in the future”. His vision has been shared throughout SCG, and employees are embracing more entrepreneurial experiments to identify new, sustainable growth opportunities to transform this multibillion-dollar company.
Decision-making practices that often took years need to change to behave more like a Silicon Valley start-up.
3. Societal value
Societal value is external and describes the organization’s contributions to improving society. Businesses around the world have a vast footprint and increased recognition of the significant responsibility they have to create positive value for the communities they serve.
The 2017 Global RepTrak 100 survey shows that citizenship (defined as a positive influence on society) is among the top three factors that matter to customers. Bangchak Corporation is a Thailand-based energy company. Bangchak’s chief executive, Chaiwat Kovavisarach, is leading a remarkable effort to accelerate the company’s transition from a fossil-fuels-based petroleum company to a renewable energy leader, particularly in biofuels, solar and wind. He is keenly aware that fossil-fuel inventories are in permanent decline, and have deleterious consequences for society. The effort extends to plant operations, retail service stations, and even to its new LEED-Platinum certified corporate headquarters. Employees and visitors experience facilities that are energy-efficient, with lighting and internal climate control that adjust automatically when people enter and leave rooms, to internal hydroponic gardens and recycled construction materials.
As Kovavisarach has said: “Our employees and our customers know that we are giving back to society, and that is aligned with our purpose. We are not a charity, and ensuring financial viability remains a core aspect of our success. At the same time, we are more than just a company. We are a collection of people who want to pay back our success to society. We want to be Asia’s leading Greenovation group, as this focus helps employees rally around an important cause. We have loyal customers who believe in our green products, our natural lighting in service stations, and the fact that we collect rainwater for recycling. And our employees respond to this. We have even embedded CSR into individual performance KPIs.”
Singapore has long been recognized as one of the world’s nation-building success stories. A tiny country with just over 5.6 million people, it clearly punches above its weight in global rankings. For ease of doing business it is consistently ranked among the top five, according to the World Bank. Transparency International has ranked Singapore among the top ten ‘least corrupt’ countries in the world for several years (#7 in 2016), the highest ranked Asian country (for select comparison, #1 is Denmark, the US is #18, and Somalia is #176). Its gross per capita income is #4 in the world at US$87,000+ (Qatar is #1 at $129,700+; US is #13 at $57,200+). Its primary and secondary education are ranked #1 in the world, according to the Trends in International Mathematics and Science Study(TIMSS). And it has a dynamic blend of cultures, including Chinese, Malay and Indian. The country has all the right ingredients to further accelerate its global impact, and a new organization called SGInnovate is designed to do just that.
SGInnovate is a private-limited company, wholly owned by the Singapore Government. Launched in 2016, SGInnovate’s purpose is to enable ambitious and capable individuals and teams to imagine, start, build and scale globally relevant technologies. Steve Leonard, SGInnovate’s founding chief executive, is an experienced industry leader and tech executive in Asia. He fervently believes that Singapore has all the resources and capabilities needed to tackle ‘hard problems’ that matter to people around the world. As Leonard says: “Singapore is globally known for its work in deep tech R&D and innovation input. With this strong foundation, Singapore can do more in increasing our innovation output, moving all the great research into commercialization. SGInnovate’s priority is to work with deeply-technical founders that have research-originated IP at the core of their company.”
He added: “We are not an accelerator, an incubator or any other specific bracket of the ecosystem. Our focus as an organization is on backing these founders through equity-based investments, access to talent, and support in building customer traction. What I’d like to see in the next few years is more people in Singapore believing that they can build something that can solve society’s most pressing challenges. SGInnovate’s objectives are consistent with Singapore’s ambitions since its independence in 1965 to develop a model society.”
4. Financial value
Full realization of reputational, organizational and societal values then leads to financial value, which is a by-product of doing well in the other three. Emirates is ranked #2 for brand value in the Middle East at just over US$6 billion, and is the fastest growing airline in the world by passengers carried, compared to its 2012 brand value of $3.7 billion. Shinhan Bank had revenues of $14 billion+ in 2016, a market cap of $20 billion and, according to Brand Finance, a brand value of US$5.7 billion (an increase from $1.26 billion in 2011). With a market value of $19 billion, SCG, already a leader in Thailand, is beginning to see increased growth from its nascent entrepreneurial initiatives that promise to help this $12 billion revenue company compete in a faster and more dynamic digital world. SCG’s brand value is estimated to be approximately US$8.7 billion, based on the Corporate Brand Success Valuation from Chulalongkorn University. Bangchak has seen the percentage of its renewable energy revenues increase to 10% of its US$4.4 billion in total revenues, and the company regularly receives awards for its investments in social enterprise, corporate governance and energy conservation. Brand value in the energy sector ranges from 10% to 22% of total revenues, therefore using this rough guide Bangchak’s brand value is between $170 million and $370+ million. SGInnovate invests in companies from the pre-seed to Series A stage. While financial figures are not released, it has Temasek Holdings (Singapore’s largest investment fund) and GIC (another leading fund with $100 billion in assets under management) on its board and, by extension, access to their vast networks.
Asia tells the story
The last 20 years of the 20th century saw the rise of the Asian economies. The first 20 years of the 21st century have shown that Asian businesses have grown increasingly confident and are investing in all four brand value dimensions. With brand values increasing, Asian leaders and their organizations are eager to show the world that they have become the benchmark for how businesses will build brands and create meaningful value around the world.
— John Davis is Asia regional managing director at Duke Corporate Education.
An adapted version of this article appeared on the Dialogue Review website.