Success Authority Peter Beaumont explains the challenge and power of brand leadership, its influence on culture, customers, and Competitive Immunity, the ability to sustain growth, prosperity, and resilience regardless of the environment.
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Linda Ruhland
Talk to me about what brand leadership requires and how it does or does not affect a rapidly changing business environment.
Peter Beaumont
One of the things that is worrying, from my point of view, after having worked extensively in what used to be called FMCG, Fast-Moving Consumer Goods, now I believe it’s just called Packaged Goods. There does not appear to be the opportunity to build brands like there used to be.
One of the examples I would use is Coca Cola because I worked for them for 21 years. One of the things that Coca Cola displayed and showed the world as the premier marketing company of any packaged goods that you can think of, probably. Apple’s come along with technology, but I’m talking about packaged goods where consumers purchase either on premise or off premise.
One of the things they demonstrated was superior brand leadership in everything they did. It was because they tied down their brand positioning statement. They were one of the first brands to go out and find out what consumers really wanted as opposed to getting what they wanted or pretending what they wanted because they simply had a product to sell them. They actually went out and found out what consumers were looking for. And not just what they were looking for but the kind of refreshment occasions they were looking for. So, did their product actually fit with that or did they need to offer variations which, of course, in a way they did.
For over 80 years, Coca Cola just sold Coca Cola. There were no derivations of that. What they found with consumer surveys was that people were looking for more variety. As we found in our lives now, it’s all about choice. Coca Cola wasn’t keeping up with that. And it wasn’t just choice around brand flavors, it was package sizes and occasions. One of the secrets to Coca Cola’s continued growth was they adapted to consumers’ needs. They went from six-ounce bottles, which went for over a hundred and so years, to plastic, to liter bottles, to one-and-a-half liters, to two liters, to fridge packs, to cans earlier on.
That allowed them to grow their market share on occasion of usage and provided what consumers were looking for. That kind of growth took a lot of investment. Unfortunately, what we are seeing, and one of the things we are discussing at Success Authorities, is that Competitive Immunity is built on being far more long-term, strategic in the way you think rather than short-term, looking for just the competitive advantage which tends to be price or quick service. One of the things Coca Cola resisted was short-term stock market gains which were pressed upon them during the last 30 to 40 years.
This is a concern for a lot of companies. You don’t get a chance to build a brand anymore because there are so many short-term pressures to perform against metrics such as stock market growth. You are seeing companies taking their company off the stock market and going private. There are various companies doing that over the last 10 or so years. I think that will be a trend if those people want to look at the future and build a brand over time rather than doing a quick turnaround.
I think joint venture, private equity, has a lot to do with it, too. There’s been a trend to buy and turn around or “flip” quickly. And that has lent itself to not building a brand, either, because often those companies will buy privately owned successful companies and then want to IPO them within three to four years. That’s a very short target to start doing things, to leverage them and then to not really develop the brand over time. They’re just dumping those shares for a quick turnaround in the market.
The parallel that Competitive Immunity has, which I’ve been thinking about a lot because I’m in the middle of finishing Simon Sinek’s “Infinite Game.” He doesn’t refer to Competitive Immunity, but there are a lot of parallels in what he’s talking about: Companies playing a finite game in what is really an infinite game. You can’t win or shouldn’t at marriage. You can’t really win at business and people think they can.
We continually get caught up in this discussion around winning something whereas they’re short-term gains—you can call them that. But they’re not necessarily winning. To use an NFL parallel, it will be short-term yardage, but does it actually get you across the end line. And so here we go using a sports analogy again. That makes sense. That’s kind of concerning, I believe, for the future potential of building brands.
Ruhland
Let’s circle back to idea of leadership and brand. We know from recent experience especially that when it comes to employees there’s a lot of job hopping going on. There’s certainly a short-term mindset around that. How does brand come into play with respect to people and let’s say creating some level of immunity with retention?
Beaumont
Ultimately, this does all go back to leadership, of course. What is it they say? “The fish rots from the head downwards.” It takes a strong CEO or leader of the business to decide “This is the vision and let’s get everybody involved in that vision and on the same page.” It’s that “Where we want to go.” and “Stay the course.” By the way, that includes recognizing within that company what the core values are—what everybody respects and wants to work toward. That’s really, really important.
I think there’s a lot of lip service paid to core values. They’re things they like to pin up on the wall but they’re not very realistic. And nobody’s bought into them. It is a piece of EOS, actually, which I believe is one of the most important parts. But it’s not often done properly. It’s kind of a check-the-box and move on. Core values are, in my view, something the leaders should insist upon. I’ve worked with clients where they’ve avoided it, they kind of moved the session through quickly. It was too touchy-feely for them and they didn’t think it was relevant. In fact, it’s at the very core of what the leader should be standing for and ensuring that the whole team is on the same page.
It’s difficult to establish a vision for a company if you’re not feeling the same things about the business and what it means to you. I think business owners get it. Again, I’m using Sinek. If you go back inside of Sinek’s “Start with Why.” He talks about “Why did you start the business in the first place? What did you do it for? Was it to satisfy customers? Was it something you were really interested in? What was the real reason behind it? I think you need to dig into that first as a business owner. Then how does that translate into your team, their perception of it? Once you’ve got that, you can start writing a value proposition and a value positioning statement because you’ve got at the key to what really matters to the business and how it reflects on everything you do to bring it to market. That’s how you build a solid brand.
Ruhland
You are talking about some of the building blocks within the organization that are reflected through the brand. What you are saying is that, to a large degree, branding is internal, built within the value proposition and core values of the organization and then reflected visually and through the behaviors and beliefs of the people.
Beaumont
Yes, absolutely. Let me give you another analogy. I’ll use Coca Cola again because it was a great learning curve for me. The first five years it went pretty much straight up. By the way, it was interesting when you worked for a company like that, it had its own distinct culture. I don’t want to waive off what you just said. But Pepsi had a very different culture from Coca Cola. It was built on the way that the leadership had seen the purpose and the way the company worked. For example, Coca Cola was much more corporate: plush carpet in the offices, tie and suit on every occasion, very formalized in the way they went about things in the early days. Pepsi was much more brash. Acted like number two, not number one. That’s exactly what they were and continue to be so. When you are number two you act very differently than what you should do because you are chasing number one. Number one’s the authority, the monarch. Number two is the court jester who is trying to catch up or feel they should get into that role at some point. Very different cultures.
Back to your question on brand. The reason I went back to Coke, we used to talk about the intrinsics and extrinsics of the brand. Intrinsic being when you drink a Coke, there’s a bite at the back of the throat. There’s a refreshment and effervescence, that special sound when you open the top of the bottle. Extrinsic is what it provides for you in terms of the refreshment and the feeling you get as a result on a hot day of that refreshing drink. It’s the same with a company. You’ve got to get the intrinsics right first before you can project and therefore deal with the extrinsics. The intrinsics are “What are our values? What does the brand stand for? What’s our positioning? What’s our target market?” The extrinsics are “How does it reflect on itself? How do we position that? How do we market that?” It’s an extension of that. And then, “What is the consumer looking for?” and so how do we build that into those extrinsics? That’s how I look at it.
Ruhland
You brought up culture. Would you say that culture is an intrinsic part of the brand?
Beaumont
Yes, I do. Once you’ve settled internally on what the brand being the company stands for, it should then be an integral part of the product or services you are offering. That’s where we build and cross that bridge. “Here’s what we stand for. Here’s why we are in this business. How do we bring those to customers?”
Ruhland
Among all the things we’ve talked about pertaining to brand and employees being part of that brand, none of it has to do with salary. If somebody is really engaged in what a company stands for, what the brand means both to their customers and to themselves, is that not hard to replicate in another environment? If we were really focused and effective with our brands, wouldn’t we be less challenged to retain our people because they would have to forfeit more than a paycheck?
Beaumont
There’s a lot of truth in that. What’s happened over the years is that, clearly, if you believe the data where 75 percent are looking for the next job and 70 percent are ready to leave now, COVID has made people rethink their lifestyles. We used to blame it on the Millennials. It’s not true. It’s true of everybody. I think that it’s come home to confront us now. We have not taken account of working conditions and pulling people together as a team as much as we should have done. As a result, people get dissatisfied very quickly. Several surveys have been taken on why people leave their jobs. The number one reason is the relationship with their manager. Hah, surprise! Numbers four or five is salary. And in between are environment, working conditions, coworkers, commute, and stuff like that. But number one is the relationship with the manager. That’s where the secret sauce lies.
If you can establish excellent relationships and build a team based on the same values. Then develop a culture, because a culture develops over time; it’s not something you instantly switch on. We’ve created our own problems by, in my view, poor leadership. By the way, back to the discussion earlier, why is that the case? Is it just because we’ve got poor leaders? In some cases, “Yes.” But I will also suggest, it’s because their focus has been on short-term measures: competitive advantage, the finite game and not the infinite game. You can’t build a culture if you’re focused on the short term. It just doesn’t work.
Ruhland
Within this permanent white-water environment in which we’re being constantly buffeted with change and unexpected circumstances that we have no control over, the idea is to be intentional rather than reactive to change. What would you recommend right now to people who are reacting to all the impact that this longer-than-imagined pandemic has caused in our work and society in general? How do we move forward in this?
Beaumont
There are two things. One is that we’ve got to do something short term. Fix some of the things, supply chain being one of them. I asked a client yesterday at lunch, “What is causing the supply chain issue?” “We know what it is with cars, but what is it with all the ships that are lining up? What can we do about it?” And there was silence because it is outside our control. If so, then what else are you going to do in the meantime? Are you just going to wait and tell customers they have to wait forever? Or are you going after business where you have got raw materials and services. And those go on the backburner, they’re in the pipeline, but you look at some other piece of the business you can field using existing resources. So that’s the short-term scenario. Then, what’s going to happen long-term when things get back to normal? Can you sustain and keep those customers? Are you going to move your business into two areas or even three that you weren’t in before? Those are the kinds of things we should be looking at.
The other thing to address, big time, is relationships. When you get into short-term myopic crises, you tend to forget the things that really matter over time. Those are relationships, internal and external. Internal relationships to build that culture, to make sure that everybody is on the same wavelength. External, to build your vendors, suppliers, customer base, and stakeholders—board members, etc.
When we’re myopic, we forget about the relationships. And we often make decisions that are counterproductive to building those relationships. I think that’s one of the reasons why the workforce is so ready to look for the next opportunity. They haven’t built a relationship with their company, their manager, or indeed their brand, so it’s easy to break off. It’s like getting a divorce after two years. There was never really a relationship that had time to take seed, so it’s easy to walk away without trying. That’s a breakdown in relationships. You know the two things that form the basis of any good relationship are trust and respect. Without those two things, there’s no reason to have that relationship.
Ruhland
You bring up some vital pieces of evidence as to what’s happened up to this point, and why and what we can do about this. During this time, if we’re smart, are we seeing opportunities that can help propel us forward? Are there some people who will come out ahead because of the current circumstances?
Beaumont
The first thing is to never make the assumption that we are smart, right? If we are smart is a good question at this point. Of course, out of adversity always comes some learning. We’ve heard time and time again that to fail is to learn, refine and get better. Seth Godin talks about it a lot. Unless you’ve failed, you’ve never really learned anything. I think a lot of companies have flourished during COVID. Most of my clients have done really well. The reason is that they either had or were working on establishing a good leadership team, a set of values, and going through scenario planning.
Those that disposed of their services because they ramped in, went into panic mode, saved all the money they could, were the last to try to get an SBA loan, by the way, and probably didn’t get it—they have not fared so well because they went into literal business lockdown. Those companies have not flourished. They may get back, but it’s unlikely. As someone once described to me, COVID was a great opportunity to get your house in order because you weren’t moving at the pace you were previously. To really look at the business under the microscope. The smart people hired people like me during that period. “I need somebody to help me get my house in order, ready for the gold rush when we come out the other side.” Because there will be.
There’s pent-up consumer demand. Unless you get that foundation corrected, fill up the cracks, take out some of that rotten concrete and replace it, you’ll not be able to build on top. That’s a long way of describing “Yes!” that we’re going to be coming out the other side and the smart people will be ready for it.