Chapter 13 : brand ORGANISATION ARCHITECT

Strong brands have always been those which have proved themselves capable of taking advantage of change. Until recently, the required level of change seldom impacted the form of the organisation itself. Now it does.

Keywords can help leaders communicate a change culture. "Architecture", "glocalisation", and "team networking" reverberate through Brand Chartering in general, as they must through the mind of the Organisation Architect in particular. However, in this chapter we will use the word globalisation more often than glocalisation. A semantic reason for this is that globalisation is the term on most organisations' minds. In turn, our practical reason is that many companies now have a lot to learn about focusing global leadership competences and their organisational connections with brand marketing.

We do not believe that an international business can afford the classic brand management system any more. With hindsight the number of local and fragmented biasses imposed on a company by this organisational system are alarming. Equally, a company courts disaster if it leaps to an opposite extreme of a pure global brand system in which:

·consumers are not permitted to interpret the brand through locally designed identifiers or sub-brands

·local marketers are not encouraged to dialogue with headquarters on their intuitive feel for and informed monitoring of local competitive conditions

In this regard, we often advise that pilot Chartering of an intended global brand system should start with draft scripts contributed by teams at opposite ends - headquarters and local. We can then work on whatever degree of synthesis is needed. The true art of brand organisation is about balance ( globally and locally) and balance ( medium-term and short-term) and balance (partner and competitor) and a long list of other balances which you should make a list of.

In order to ensure that top level brands serve as Unique Organising Purposes, be prepared to think in general organisational terms as well as those of brand process. For example, in "Competing for the Future" Hamel & Prahalad recommend steering towards such organisational "syntheses" as:

·Collective, to balance centralised and decentralised

·Directed, to balance bureaucratic and empowered

·Benefits-led, to balance technology-led and customer-led

·Core competence, to balance diversified and core business

This chapter asks you:

·first to consider why global branding is likely to require an organisational form which places new emphasis on integration of marketing process and networking culture

·second to explore practitioners' visions of top level organisational meanings of global/corporate (banner) branding

·third to review why making changes to brand marketing process - inside and outside of an organisation - can involve bigger challenges than many companies realise

·fourth to share in principles and practices which can be used to lead the organisation beyond brand management

Global branding : facilitating networking process and organising systems

In marketing and academic literature, there have been many attempts to define global branding. Most of them are confusingly precise. They departmentalise a concept whose essence is organisational integration! Distractions involve meaningless agendas (unless you have a vested interest in supplying some fragmented component of branding), such as whether the brand has to have a global advertising campaign before it is accredited with belonging to the global species.

In refining what global brands need to revolve round, we suggest a particular starting place. What are the organisational implications of globalisation? Make a list of the most fundamental organisational requirements first. Examples are shown in Table 1.

Table 1 : Mosaic of organising meanings conveyed by globalisation "Globalisation means a greater need to coordinate management services over wider expanses of distance and time" "Globalisation has created the new critical success factor of organisational foresight - wherein managers spend less time about how to position the firm in existing 'competitive space', and more time creating fundamentally new competitive space" "Different cultural preferences, international tastes and standards, and business institutions are vestiges of the past...I do not advocate the systematic disregard of local or national differences, but a company's sensitivity to such differences does not require that it ignore the possibilities of doing things differently or better" "The global corporation will serve its key customers in all key markets with equal dedication. Its value system will be universal and apply everywhere. In an information-linked world where consumers, no matter where they live, know which products are the best and cheapest, the power to choose or refuse lies in their hands, not in the back pockets of sleepy, privileged monopolies like the earlier multinationals""The business world is going international rather than insular. So, big regional companies which have grown fairly fat are now finding that they are only seventh in a world where only the top three will survive"

Add to this, your simplest conceptual statement of the ingredients of a strong global brand. For purposes of illustration, we will try out the following:

STRONG GLOBAL BRAND = organisational network which interfaces two global good marketing fortunes ·1·Marketing System : owns highly selective competences, and team networking culture capable of sustaining world beating integration of: - product offers and - distribution systems through to end-consumers·2·Marketing Communications : owns categories whose essence can always be represented by an exciting communications platform to the world at large

Try out your definition (or ours) on (say) four strong global brands to decide whether it works for you in balancing architectural simplicity and completeness. Example:

marketing fortune	GILLETTE razors and male toiletries	NESTLE family menu of packaged foods
systems	Reengineered brand marketing architecture: moved from locally operated marketing to global orchestration : eg satellite advertising campaigns, flagship product sub-brands (eg Sensor)...	Structured banner brand and "glocal" management system around portfolio of category leaders. These gain from and add to corporate banner of being the world class foods company
platform	Male fashion theme lifts product category above competitive renderings and fits program (eg sports, music tv) material most capable of reaching out to global audiences	Global use of "Nest" icon connects: ·intricately smart execution of a global quality marque ·simple theme fitting wide range of category leaders in family-hoarded foods
marketing fortune	WALLS +Unilever's other ice cream companies	PAMPERS diapers
systems	Globally, Unilever has installed more company-owned freezers for distributing ice cream than any rival company	P&G scale & commitment to constant innovation of world class technology relevant to product category
platform	Ice cream advertising easily communicates : eg impact on hot day impulse (immediate self-gratification from one of "life's little luxuries")Ice cream is also a natural as a high visibility category. (Whilst on globally different pitches, Walls and Haagen-Dazs are two leading animators of this cultural facet of the product)	Human emotional highground: ·spokesbaby works universally as most powerful tv ad announcer·natural upmarket category - in some developing countries we've even seen residents flying in with Pampers instead of "duty free"!

These are not intended to be comprehensive brand portraits. But they do provide a window for exploring two of the most basic truths of global marketing - even for packaged goods manufacturers' brands (where some commentators argue, misleadingly in our view, that organisations have a lot more time to accommodate globalisation forces than nearly global categories such as electronics, cars, fashion goods, ...).

•1• Survival of the fittest depends on harmonising product offers ahead of competitors so that world class standards of quality and value are delivered, and non-essential local variations in every country are streamlined out of business processes

Just one Cornetto Unilever was surprised to discover recently that it was making Cornetto ice creams - supposedly a standardised Euro-product in 15 different cone shapes. Only a few years ago, this kind of disparity would have gone unchallenged, and probably unnoticed. However, the focus of the single European market and fiercer competition have forced Unilever to ask whether it needs - or can afford - such diversity. In many cases, the answer is no. Indeed, the company has concluded that its product range has often evolved less in response to vagaries in consumer taste than because each of its traditionally autonomous national subsidiaries had been left to do things in its own way. Financial Times, 28 October 1991

•2• Global branding is not sustainable just because of world class products; brands represent specifically focused business systems and uniquely economic communications platforms. These are keys to an organisation's ability to perpetuate sustainable advantage and communicate added value. Reciprocally, a selective focus is necessary on product categories which have globally brandable characteristics either individually or as a collection of categories.

What made the above categories natural candidates for global branding?

Interestingly, the category territories of Gillette and Nestle were not originally conceived as profitable global categories. Major reorganisations were required to changeover from profitable ways of operating in an era of multi-local marketing which had become inappropriate organisational forms for doing global business. (See ThinkPiece 1, and Nestle's transformation of Kit Kat later in this chapter)

In the case of baby's diapers you have a category that fits:

· a global communications theme "baby-love" as naturally as it fitted local ones

· a marketing pattern which fits the operating culture which is quintessentially Procter & Gamble: scope for perpetual product innovation; world scale and ever increasing market size; consumer need where demonstration of product superiority is integral to branded emotional platform.

In the case of ice cream, ownership of freezer systems has been a competitive advantage (making it difficult for new competitors to gain distribution in as economical way) that has historically allowed Unilever to move at its own multinational pace even when challenged by more globally fast-run competitors such as Mars. Unilever's organisation is apparently most naturally at ease with a pace of change which is relatively slow by some global standards. Typically the trio : Magnum (choc ice stick bar), Cornetto (packaged ice cream cone), Vienetta (Ice cream meringue pudding) have had time to shape up to be three popular reference points of consumer ice cream menus. Merchandised side by side in the company's dedicated freezers these product flagships are designed to form a strong global collection whether their local corporate name is Walls or Igloo or Ola.

Visioning new organisational meanings in global brands

Table 2 shows a selection of quotes, primarily made by practitioners, reflecting on how visions of global branding tend to unify strategic leadership meanings and operational practices.

Table 2 : global branding - strategic meanings and organisational practices "The 3M logo is the primary symbolic representation of 3M's people, products and values. It is also the most valuable property we own."3M corporate brochure "Global brands are emerging because companies that make and market them are becoming global organisations.... The brand is a by-product of organisational experience and business systems (which is what we truly leverage rather than some catchy name)...So why do organisations, including my own, continue to strive for worldwide brands? I believe that they are rallying points or symbols for the organisation itself, for the experience and knowledge it brings to the marketing of soft drinks, cigarettes or beer." Michael Jordon (former president of Pepsico International, now CEO Westinghouse) "Successful companies will be market-driven by adapting their products to their customers' strategies. New marketing will be orientated towards creating rather than controlling a market; it will be based on developmental education, incremental improvement, and ongoing process rather than simple market-share tactics, raw sales and one-time events. Most important, it will draw on the base of knowledge and experience that exists in the organisation"Reg McKenna, "Marketing is everything", Harvard Business Review, Jan/Feb 1991"The dominant associations that produce a master brand also reflect the core competences of a company. In particular, brand competences are those marketing activities that give a brand meaning and provide its added value to products. To protect brand competences from erosion many brand decisions are now being made by senior managers instead of category managers and brand teams. One result is a much tighter focus on the brand's distinctive competences."Farquhar, Han, Herr and Ijiri, Marketing Research, September 1992 "In the old days, it was up to the worldwide business manager to make the case that a new product was right for local markets. Now it is up to the local manager to demonstrate that it is not going to fly locally. Our expectation is that every new product will find a global market".Anonymous US executive requoted from Hamel and Prahalad, Competing for the future "To compete internationally a company cannot afford to be in the second division of a branded marketplace. Being one of the leaders matters. It gives you the credentials to invest in the latest technology, to continue to attract the best teams of people, to deal as an equal with the trade, to be respected for independent corporate values in the joint ventures you enter..."Sir Adrian Cadbury (quoted in World Class Brands, Chris Macrae)"To me a global brand is a product or service that has a consistent worldwide identity and a consistent message and a consistency in terms of price, value and performance. Your identity must be clear, credible, and relevant. If you want to own this globally, you are going to have transport your culture, your vision, your way of doing business to marketplaces where you are dealing with foreign nationals. If you are going to partner with these people, you have to find the right partners, establish the right deal, and if these people are strong and entrepreneurial business people they will want to share your vision and work with you on it."Alan Siegel, Chairman of Siegel & Gale (BBC for Business video "Branding - the Marketing Advantage")"A global brand is a brand where people around the world share the same vision of that brand"John Hegarty, Bartle Bogle Hegarty (BBC for Business video " Branding - the Marketing Advantage")"In effect, Europe marketing (at haagen-Dazs) works with the local teams in order to be able to meld what is European about the brand with the local components. I have to say it's not always the easiest thing for us because we're all individuals with different opinions. We have a lot of debates before we actually deliver or execute in the marketplace, but I think that's healthy, actually very positive because it brings people together against the same objective."Claire Watson, European Marketing Director, Haagen-Dazs (BBC for Business video "Branding - the Marketing Advantage")"As a global brand we have a real challenge in terms of ensuring consistency in our advertising message. We want to come across a s a global business as well as making sure that people think of us as a local business. One way we have succeeded in this is our testimonial format of advertising. If you go to Germany or Italy or japan or Mexico you will see a similar type of advertising on the television. You may not understand the language the person is speaking but the style, the approach, the endorsement from the service establishment featured in any one of those markets comes through and says this is an American Express ad. So we have a global approach to advertising but we really try and localise it which helps us to make it much more relevant to the customer in any given market."Russ Shaw, American Express (BBC for Business video "Branding - the Marketing Advantage")

As you can see from the previous table, it "should" increasingly be impossible to separate out strategic meanings of global brands from organisational practices. We would go further and say that if this separation is apparent in a global brand, then the brand is a weak one.

We can now refine our earlier concept of a global brand. The organisation architect may wish to use the following perspective:

"A strong global brand embodies a total organisational system for managing its service raison d'etre (or essence) to its own uniquely orientated advantage wherever primary value forces are foreseen to be global in nature ; the weak global brand either does not have such an internal (ie organisational) support system or has one which is not continuously being tuned to its own proactive needs". Weak global brands either have to be made strong as a matter of urgency, or the free forces of market globalisation will kill them off.

We would urge you put this into your own words. It should take you to the organisational heart of why strong global branding is a vital leadership endeavour.

Ask yourself and then everyone around you : should an international manufacturing company's processes be directed towards providing solutions to consumers' needs that are the best quality and value in the world or should the extra cost of multiple and fragmented processes be taken on in the name of local customisation? Extraordinarily, the latter persuasion has persisted until very recently in various companies - even as other aspects of the business were going global - because built in to marketing departments' functions was the organisational belief that they, on the company's behalf, could profitably manage up to 5000 different branded devices for targeting local market segments. Divided to conquer, brands often became disconnected enterprises; brand planning often meant internal warfare between managers of brands over allocations of the company's resources of time and money. This is not to argue against suitable local customisation, but you do not need - and cannot any longer afford - to divide and multiply your branding process into fragmented brands at every decision-making junction of the brand organisation.

The classical brand management system encouraged companies to brand products. Recently it has become far more important to brand businesses instead of products. Almost every change factor, with an influence on the future economies of branding processes, points to this trend being irreversible. And, we repeat, you can always sub-brand products for point of sales impact.

The totally integrated characteristics which make global brand processes powerful require continuous organisational learning to be an accomplished player. No decade in business history will be more timely than the 1990s for an exchange of working precepts between companies who are on the learning curve towards globally integrated brand organisation.

We classify three stages of evolution of the species of international companies with significant investments in brands:

1) The company whose business is globalising but whose brands are operated by local managers

2) The company which has formed global brand and business teams but is only a few years into the cultural evolution which this entails

3) The company whose global branding process has robustly led its sphere(s) of business over a significant period of time. Ten years is typically a minimum period to demonstrate that the process achieves a suitable balance between such subtle cultural characteristics as consistency, flexibility, quality, being value driven, and being globally and locally meaningful.

In the mid 1990s, the evolutionary spread of these companies appears to be:

·Most companies are in the second stage of development - an organisational voyage that has departed from local systems of branding and is intent on discovering a form of world class branding which uniquely suits their corporate purpose. Employees from these companies are usually quite open in admitting that the company is learning anew about brand organisation.

·Relatively few companies are as yet culturally proven at stage 3, although the Japanese may be the most populous of this species

·Some companies are stuck at the first stage of evolution

The challenge of changing marketing process from departmental function to organisational school of thought

We would advise you not to underestimate the sizeable and varied organisation challenges that are involved in making the changeover from stage 1 to stage 3. There is all the difference in the world between fragmentation into locally timewarped brands and branding the company - so that everyone across the organisation network - understands the subtle contributions they can make to being fit as a glocal competitor (ie global and local in action and in thinking).

At this stage, we reproduce a landmark article from The Economist of 9 April 1994. It is cited by a wide variety of people as a turning point. The need to go organisationally beyond the classic brand management system is no longer something that business people only speak about behind closed doors.

Death of the brand manager

One year after Marlboro Friday, brands are still alive. But keeping them so may mean killing off the marketing department.

At the start of this year Unilever's British soap arm, Lever Brothers, abolished the job of marketing director. A year earlier, Elida Gibbs, the Anglo-Dutch conglomerate's personal-products division, had done the same. Though the details vary slightly, both companies have squashed together what they used to call the "marketing" and "sales" departments, and then reorganised them as a series of "business groups" focusing on consumer research and product development. Both also set up a separate "customer development" team, responsible for relations with retailers across all the companies' brands.

At Pillsbury, The American food subsidiary of Britain's Grand Metropolitan, the old-style marketing department has been replaced by multi-disciplinary teams, each gathered around a product group, such as pizza snacks. Each team involves managers from production and sales as well as marketing. "In the past if anything went wrong, Marketing would blame Sales and Sales would blame Operations" says Paul Walsh, Pillsbury's chief executive. Under the new system, the aim is to make everyone - not just those who might have carried a marketing label - "the champion of the brand".

Ever since the 1950s, when they were developed by American manufacturers of fast moving consumer goods (FMCG), marketing departments have revolved round brand managers. Companies such as Procter & Gamble developed brands that divided markets into ever-narrower segments (not just shampoo but anti-dandruff shampoo). Each brand manager was responsible for a single brand in a single country, handling matters such as advertising and packaging. A separate sales department was responsible for getting the products on the shelves.

This time-tested structure is now facing unprecedented questioning in FMCG heartland. A recent study of American consumer goods companies by the Boston Consulting Group found that 90% of those surveyed claimed to have restructured their marketing departments. "Every company is this debating this internally right now, but they are making changes without big announcements" says Ray Goldberg of the Harvard Business School.

Some of the marketers' woes stem simply from the recession in the rich countries. Most of the so-called FMCG companies have been on a cost-cutting drive. In the past year, Procter & Gamble, Philip Morris and Unilever have all announced plans to close plants and sack thousands of workers. Yet the pains of the FMCG manufacturers are also linked to two more permanent changes in the pattern of shopping. Neither trend is new. Indeed, FMCG firms have spent a decade busily denying that they matter. Only now have they begun to admit that the danger is real.

The first trend is that people increasingly buy goods on price, not because they carry a famous name. This was driven home to advertising men on April 2nd 1993, when Philip Morris announced that it would slash the price of Marlboro cigarettes to defend the much-advertised brand from cheap, generic rivals whose share of America's cigarette market had jumped to 36% from 28% in nine months. "Marlboro Friday" prompted some analysts to proclaim the death of brands, though it may be that Philip Morris had simply pushed up the price of Marlboro too far. Marlboro's market share had recovered to 27% in December 1993, up from 22% in March 1993 (though Philip Morris's American tobacco profits fell by almost half last year).

The second trend is the shift in power from manufacturers to retailers. Investment in new shops and information technology, and the weakening power of brands, have helped retailers to exploit their proximity to the consumer and dictate terms to their suppliers. sales of own-label goods continue to rise, pushing branded goods from the shelves, especially if they are not leaders in their category.

In Britain, own-label sales take 36% of the grocery market. In America, where own-label brands still have a cheaper image, sales of own-label goods at supermarkets rose from 22% of their total grocery sales in 1990 to 23.5% last year. By 2000, the figure will be 27%, according to a study by J.P. Morgan, a New York bank. Even mighty Coca-Cola is not immune. In the past three years, Cott Corporation, which bottles private-label colas, has grabbed about 20% of the cola market in Canada and 2% of America's. Coca-Cola's Canadian operation lost C$143m ($111m) in the year to January and closed half of its 16 plants. Cott is now discussing the launch of an own label cola in Britain with J. Sainsbury, a supermarket chain.

Although manufacturers continue to scoff at the own label threat in public, in private they are bending over backwards to be nice to retailers. In 1992 America's Grocery Manufacturers Association joined the Food Marketing Institute (representing the supermarkets) to launch an "efficient consumer response" programme aimed at cutting costs and eliminating $130 in excess inventory carried by food retailers.

Has all this made marketing too important to be left to the marketing department? A recent study by the London branch of Coopers & Lybrand, an accountancy firm, concluded that "marketing as a discipline is more vital than ever before" but that the marketing department itself is "critically ill". And in an essay last year, consultants at McKinsey argued that large marketing departments are "often a millstone around an organisation's neck". Many companies that have "re-engineered" their production departments are now applying the same process-driven logic to their marketing department.

Even without pressure from retailers, internationalisation and the rise of global brands had weakened the autonomy of the traditional national brand manager. To respond better to retailers, Procter & Gamble has switched to "category" rather than brand management. It now manages all disposable nappies (diapers) or shampoos as a unit, rather than just Pampers or Pantene separately. Both P&G and Unilever are dropping lesser brand names and concentrating on wider "umbrella" brands.

Meanwhile senior brand managers have taken over control of pricing and promotions from marketing departments. This was prompted, in part, by the mistakes marketing departments made during the recession. In America, brand managers had embarked on a suicidal orgy of trade promotions and coupon offers. Grocery-coupon redemption doubled between 1985 and 1992, to $4.6 billion, and 60% of breakfast cereals are now bought on promotions. All this merely helped to undermine brand loyalty. And trade promotions encouraged retailers to bunch their orders, playing havoc with manufacturers' production schedules.

In 1991 Procter & Gamble introduced "everyday low pricing" : it has switched to lower stable prices, scaling back promotions. P&G has since gained sales volume, and even - thanks to its cost-cutting efforts - posted higher profits. General Mills, a breakfast-cereal maker, announced a similar move this week. It is cutting list prices and withdrawing 30% of its promotions.

Changes like these are destroying the traditional brand manager's role. But, says Chris Macrae of Coopers & Lybrand, companies have found it easier to pull apart an outdated marketing department than to decide what to put in its place. Even when the reorganisations seem to work (Pillsbury claims that its shake-up has cut product-development time by 30%) they hardly constitute a universal model for how firms should approach marketing.

Instead, FMCG chieftains talk mistily about "evolution". Through the mist, two contradictory ideas are emerging. One is that manufactures must move closer to retailers. "Marketing departments will have to get rid of their arrogance and go and ask retailers how they can make money together," argues David Nicol, a campaigner for own-label and a consultant to Cott. That means shared computing and, maybe, shared research. To many manufacturers, this spells an unglorious future as sub-contractors.

An alternative idea is to focus more on the consumer. Don Leemon of the Boston Consulting Group points out that some FMCG have created geographical teams that include people from marketing,sales, finance and production. Their job is to keep retailers happy. It would be better, Mr Leemon says, if they revamped arguably the most important marketing function of all : developing new products that consumers want. That means yet more expensive research and even quicker ways to rush new products to market in the hope of inventing a new Coca-Cola. The odds against that speak for themselves. Marketing's mid-life crisis is far from over.

Amen to the death of the brand manager, but long live the brand. Throughout the history of brand management systems, since their emergence with manufacturers investments in the televisual age of mass broadcasting, common organisational problems can be detected:

·A non-entrepreneurial bias - over time managers learn the art of contracting out risk decision-making, eg by passing the buck to creative suppliers, unless some additional element of the organisation's culture specifically over-rides this system defect

·A tendency towards proliferation of brands - since managers like to have their own power bases and both they and their suppliers, from creatives to market researchers, get more work from having more brands

·The spawning of complex political power battles - as managers battle over resources for each brand; a problem which companies compound when they fail continuously to ensure essential differentiation between their brands

·The value destroying syndrome - by apparently delegating brand decisions to junior and rotating brand managers, the system starts to lack continuity of knowhow. And soon becomes the antithesis of a process which engages genuinely innovative teamwork.

Worse still, there have been an extraordinary number of major branding investments this century which have had no strategy to speak of due to absence of a strategic owner of the branding process.

Our one quibble with The Economist's suitably challenging piece would be with the journalist's reference to evolution of brand organisation as "misty". It should be anything but. Chieftains cannot buy or sell world class branding competence. They must visibly lead it - dramatising the need for interpersonal motivations which appeal both to the sprinter's energy and the marathon runner's stamina. They need to balance conflicts of change and to overcome the internal politics which can fester in every department or business unit that interacts with branding to a greater extent than occurs with any other kind of corporate competence.

To which brands should the company selectively focus resources in competing for the future? Why? Who should be in strategic control of these brands? Who contributes most to their practical realisation? How will factors associated with world class branding redefine job roles and responsibilities? And how can world class branding serve to enhance teamwork, break down departmental barriers and give the brand organisation the power of united purpose?

An organisation needs to be thoroughly prepared for global marketing. Your people will face new kinds of marketing warfare; your global brand launches will be exposed to heightened forms of interrogation by opinion leaders such as journalists technical experts and other opinion leading experts who may also have commercial or amateur vested interests in what world class standards are judged by; all departments of the organisation need to know how to coherently service the brand promises you are making; mistakes, even if they are only perceived to be organisationally clumsy, may pierce the heart of corporate goodwill not some local loyalty to a product brand. Brainstorm a detailed risk list by extrapolating this paragraph's headlines to the context-specific environment of your marketing organisation

Before leaving this discussion on the dangers of being ill prepared organisationally for global marketing, Table 3 provides one more journalistic warning of the dimensions of the issue (extracted from an Editorial in The Financial Times).

Table 3 : Global marketing wars in chips and suds INTEL (CHIPS) ·In 1993, the American Accountancy magazine, Financial World, declared that advertising campaigning on "Intel Inside" had resulted in "the year's biggest increase in brand value up a staggering 107% to $17.8 Billion". Then, a little over a year later, we have Intel CEO Andrew Grove quoted thus : "This is a very important moment in Intel history as we continue to evolve into a consumer technology company. The company is learning some painful lessons about how to deal with the concerns of the buying public. The Pentium is the most tested microprocessor that has ever been manufactured in the world, but there is no such thing as a perfect microprocessor. We are anxious to have this event behind us, but given this has become a major event in the mass media, involving people who are not accustomed to dealing with sophisticated terms like random divides, operands and floating points, quite frankly we do not know what to do." (The Financial Times 14 December 1994) UNILEVER (SUDS) ·Two retailers' verdicts sum up why Unilever needs to learn fast from its 1994 "Power failures" in European detergents markets: ·"We know Unilever well. Normally, they are a class act but they don't look too clever now." ·"The whole detergents sector is drowning in over-claiming and publicity which leaves consumers confused". Financial Times Editorial (21 December 1994) "1994 will go down as the year when the gloves came off in international businesses. The fact is that markets for goods and services are becoming fiercer as they become global. The year's two great marketing struggles - the "soap war" over Unilever's Power detergent, and the dispute between Intel and IBM - also offer broader lessons: ·Global marketing is uniquely challenging. Launching a product more or less simultaneously across a continent, or the world, as is increasingly the trend in consumer markets, demands that companies attain a flexibility and focus that few have yet achieved. If something goes wrong in one national market, the chances are that the problem will spread rapidly as Unilever has found to its cost. ·Technology can be a marketing curse as well as a blessing. Companies seize on technological innovations as a unique selling point. Yet unless they subject their new products to the most rigorous testing - looking, as Unilever patently did not in the case of Power detergents, for flaws that a ruthless competitor might expose - the invention may blow up in their faces. ·Even where technology is the only obvious selling point, as with Pentium chips, there is a risk that over-ambitious marketing claims, without adequate information, will simply confuse the consumer. How many PC users had worried about possible flaws in the inner workings of their computers until Intel started trumpeting Pentium? How many users of soap powder noticed that washing damaged their clothes before Power came along? ·Companies like Unilever and P&G have learned in recent months that they can no longer hide behind the carefully manipulated image of their (product) brands; they have to explain themselves and their activities more effectively to consumers and a wider public. Consumers are more demanding than ever before - and competitors more ruthless. The manufacturer that fails to appreciate these facts will go to the wall."

Global brand organisation : transition in practice

Evolving Kit Kat as a global brand within Nestle

Over the decade prior to 1994, Kit Kat's role has been a part of three different brand organisations:

·Rowntree - mark 1 : country managers across Europe free to run their own businesses provided objectives for the business unit were met

·Rowntree - mark 2 : outside of UK, regional responsibilities amalgamated to be Rowntree Continental Europe

·Nestle : a brand organisation which in 1994 is close to being glocal thanks to sustained evolutionary efforts for more than a decade

With hindsight, the main points that can be made about the part played by Kit Kat within Rowntree are:

·The orientation of Rowntree mark 1 was short-termist; country managers added nothing to the overall organisation; Kit Kat was effectively ignored outside the UK

·Whilst Rowntree mark 2 was constituted to gain from development of organisational systems and learning across continental Europe, this did not benefit Kit Kat which was launched as a multi-local brand. Kit Kat was a brand which had led chocolate bar and biscuit markets in the UK for many decades, but was in the 1980s being newly launched into Europe. Rowntree's local market research suggested that almost every aspect of Kit Kat's UK brand mix needed customisation. The name reminded some Europeans of a cat food brand. The pack's bold red and white colours were regarded as unfamiliar and drew a cold Euro-response. It was said that Kit Kat's UK advertising slogan "have a break, have a Kit Kat" meant nothing to Europeans, because only the British were lazy enough to institutionalise the tea or coffee break at work...

When Nestle acquired the Rowntree brands - at the epoch-making price of £2.3 billion - it was not because of the performance which Rowntree had achieved with the brands. It was because of the worth that Nestle could turn them into. Kit Kat was focused on as a flagship example of how to turn a multi-local brand into a global one.

At Nestle, brands have strategic elements that are not negotiable across countries. It was decided that "have a break, have a Kit Kat" was essential to the brand, and henceforth all advertising campaigns had to focus this message. It didn't have to be a coffee break. Continental Europeans could for example empathise with a car driver's salvation by Kit Kat by being transported mentally away from the gloom of being caught in a traffic jam. This was an initial example of how Nestle's European managers worked - in a collaborative way - to converge Kit Kat's multi-local branding back to a singular European one on all strategic elements of the brand. Five years into this process :

·Kit Kat's sales in continental Europe have more than doubled;

·Kit Kat has become a flagship brand of the Nestle organisation's brand architecture. The linkage of "Kit Kat from Nestle" has become strong enough for each brand to add to the other's reputation;

·Kit Kat has evolved from a learning experience to being a proof that Nestle's business teams have the collaborative knowhow to evolve the support systems that a global brand needs even from the most multi-local starting positions. They are thinking and acting glocally to meet a fulfilling marketing challenge.

Drawing more generally from the Kit Kat experience, Nestle has stated some of its conclusions (for confectionery brands in Europe) as follows:

"The future will be in the hands of the mega brands whose manufacturers have understood and managed the 'virtuous circle'

CONFECTIONERY'S VIRTUOUS CIRCLE

value for money

+

strong advertising support

=

high volume

=

manufacturing efficiencies

The future will be in the hands of the lowest cost producer

Single production units supplying multiple markets require the harmonisation of strategy

It will no longer be valid to argue that "my market is different"

Kit Kat's experience has shown that there are more significant similarities than differences

Kit Kat's experience has shown that if managements are prepared to work together towards common goals with common strategies, mutual benefits will be realised"

Table 4 shows some of the challenges which Kit Kat has met across the different branding junctions of Brand Chartering.

Table 4 : Kit Kat - why going global is the ultimate competitive advantage of branding; why getting there is so hard organisationally

BRAND CHARTERING

ESSENCE Psychology of "Have a break, have a Kit Kat" is its core (global) branding property (not the product per se)	IDENTITYThe opportunity to persevere and become an impactful and inimitable global eccentric is real and more appropriate than promoting an abundance of locally mutated forms"Break" is an universal "calendar of mind" identifier	HERITAGE FRIENDSHIPIf a brand has led a highly competitive market for many decades, it is likely to comprise some strategic elements which should be non-negotiable in any international translation of the brand	FUTURE NEWS	OTHER CREATIVE
MASTERBRIEFINGKit Kat - evolution of many aspects of mix needed direct and evolutionary coordination to turn local leader into Eurobrand	QUALITY & VALUEIn the long-term, the costs of not turning Kit Kat European would probably have made the product too costly for everyone	FLOW/TEAM NETWORKING"It was necessary to recognise and formalise interdependence " egs: ·country managers to work together ·lead ad agency had to be appointed to focus core meaning ·market researchers had to be taught to put global interpretation before local accentuation·mix elements/production had to be progressively harmonised	UMBRELLA CONNECTIONS	OTHER MANAGE
BRAND ARCHITECTAs global brands Nestle and Kit Kat add to each other's reputations at corporate and product levels	STRATEGY ARCHITECTWorth of brand was in its competitive future as a global, not its past performance as a local Combination of brand scale and personality make it very unlikely that own label could ever beat this brand"The future (of confectionery) will be in the hands of megabrands whose manufacturers have understood and managed the "virtuous circle" (of world class quality and value)	ORGANISATION ARCHITECTCentral strategic ownership with negotiable implementation essential to developing Kit Kat as successful Eurobrand Rowntree's experiences with Kit Kat do suggest that this company was not in a fit organisational form to compete in a globalising business world	DRAMA OF LEADERSHIPThe success of Kit Kat has provided Nestle organisation with inspiration that act global and local is the company's future of branding	OTHER DIRECT

The World of Guinness

This global brand is coordinated round the world by a ring of seven regional marketing directors, who meet at least four times a year. After ten years experience of knowing each other and having often done each others' jobs, they have managed to refine a working consensus on global strategy for the branding process.

The emergent brand strategy revolves round the idea that every country should have one core reference point for buying into Guinness. This reference point varies country by country. Explicitly, Guinness aims to provide every country's consumers with the reference to Guinness which is the best competitive quality/value point for their needs.

Thus in Nigeria (which is actually the third biggest market for Guinness) and many other developing countries, "Extra Stout" is brewed locally and is the consumers' local beer. In confirming this position, Guinness seeks to be unbeatable on price. Local production ensures that no import tax is due. Whilst much of the Guinness identity systems employed in these countries would be recognised by international visitors, the local perception of Guinness has little or nothing to do with Ireland.

In most of Europe, an opposite image is studiously cultivated to support Guinness's premium positioning. Guinness is Ireland's leading brand. More than that Guinness is delighted to franchise the Irish drinking experience and bonhomie wherever demand for this can be created. Specifically, Guinness owns a company that will build an Irish pub for entrepreneur and would-be landlords around the world. As well as offering a choice of five typical "Irish-designer pub formats", Guinness provides the brand paraphernalia and recruitment services placing Irish bar staff (and access to Irish musicians, including Irish bands on tours which Guinness orchestrates).

The Irish card so presents the global staging opportunities that a country's leading brand ambassador enjoys. Thus Guinness staged 6000 parties on nights when Jack Charlton's team were playing in the 1994 World Cup, as well as being closely associated with Big Jack's press conferences. Guinness regarded the relaying of this sporting celebration around the world as "a great event for pulling our organisation and our people together".

Another PR platform, which puts Guinness in the news just before the festive season, is the year's Guinness Book of Records. This shows how a book can turn out to be a world class sponsorship platform.

The support systems for premium quality Guinness are probably unrivalled anywhere in the world of serving a drinking experience. Pub staff are educated in rituals in serving Guinness, and rewarded with mystery shopper competitions who spot the perfect Guinness being served. The Guinness which is exported around the world is subject to elaborate quality tests to ensure consistency of taste worldwide.

Guinness strategy also involves offering a complementary portfolio to most of the world's brewers of blond lager. Guinness aims to be the ideal partner with a major brand in every distinct sector. So Guinness stout is accompanied by the red beer Kilkenny from Guinness, and non-alcoholic lagers such as Kaliber by Guinness.

Guinness has an unquenchable appetite for vital strands of branding such as:

·innovation, eg draft in the can

·sampling and other trial inducing activities

·visible point of sales material, centre-staging the unique appearances of its flagship products wherever they are consumed

Integrated presentation of the mix is taken seriously globally and locally. Guinness people keep at their fingertips a comprehensive bible on every major branding process (called the brand equity benchmark).

Seven marketing directors with ultimate responsibility for the branding world of Guinness is - we are told - close to being the ideal size for Guinness's top marketing team. Any less and it would be hard to keep locally in touch with the world; any more and it would be hard to forge the collaborative instinct of what strategically important details need continuous circulation to be within fingertip reach of everyone who contributes to the brands.

Recently, a group financial director asked : why do recent global launches seem to have been relatively poor performers? The marketing team were able to show that in fact every meaningful worldwide business in Guinness history had taken ten years to cultivate, and recent launches were just as much on track as any historical initiative.

The lesson that world brand businesses can take ten years to substantiate is one which many other organisations never get the opportunity to learn. They were beaten by short-term pressures and the vicious circle of lack of marketing confidence that comes from:

·diffuse and disorganised records on the historical drivers of their brands

·lack of stability amongst pivotal marketing personnel and the lost learning opportunities associated with such branding disorganisation

·an organisational culture which fails actively to support medium-term brand developments that are vital to leading the quality standard

All that the marketing people from Guinness would claim is that: the bottom line is that our brand organisation is working for us; we are the most profitable brewer per hectolitre in the world; and we reckon that globalisation forces mean that there is lots more growth potential to come on tap for Guinness.

The new horizons of branding at SmithKline Beecham

SmithKline and Beecham merged to be a worldwide company. Outside of ethical pharmaceuticals, the new organisation selected to focus on just six consumer branded categories. Here are the principles that they say "we" at Smithkline Beecham are putting into practice:

Our purpose in each category is to focus on innovations with worldwide potential. Gone are the days when innovation was locally driven and meant little more than a tenth flavour for a Ribena drink or a fifteenth perfume of Bodymist deodorant.

We need few failures; real competitive advantages; and real returns from investments whether these are R&D or media.

·Our goal is to maximise resources on a global basis and so gain competitive advantage

·Our attitude : become more long-term; more orientated to the big idea/project

·Designated key categories : Oral health, Nutritional drinks+ OTC: Gastro/Intestinal,Upper respiratory, Dermatology, Analgesic

Members of our category innovation teams are multifunctional, drawn from around the world. They are charged with searching out and conceptualising best innovation ideas from across the organisation. These are then independently evaluated, and we aim to make the whole process transparent to all involved. We communicate our criteria for selecting new product developments within categories as simply as possible. For example, this two by two matrix represents our lead criteria in prioritising practical business opportunities:

LOW...........commercial potential..............HIGH

Likelihood of HIGH	Bread & Butter	Pearls
technological success LOW	White Elephants	Oysters

Obviously, we aim to avoid White Elephants and push up Oysters into Pearls wherever possible. We are focusing on : time to develop, R&D costs, competitive scenarios, pricing, positioning, market growth, product lifecycle.

We want to avoid the brand management syndrome - that system was a real menace with everyone wanting to make their mark in the 2 years they were assigned to a particular brand; and we want to move faster than competitors on winning ideas.

On 'go' projects, we provide local markets with a complete "franchise" kit on how to market; changes can be made but only with proven evidence. Since adopting Category Management, international consumer research has shown that strong concepts generate much more commonality of consumer appeal than had previously been realised.

Also we insist that winning concepts are rolled round the world fast, eg under one year rather than 5 years it used to take. The way we have organised Category Management aligns people to feel part of world teams that win.

We are organising Category Management so that everybody pulls together globally and locally. This previously did not previously happen.

When an organisation is committed to progressing international teamworking, it needs to be sure that all managers respect the same modus operandi. The following extract comes from the EIU's 'Transforming the global corporation'.

SmithKline Beecham articulates precisely what it expects of leadership within the organisation. The company's Nine Statements of Leadership Practices are well known within the industry. SKB managers know fully well they are expected to do the following: (1) Find opportunities for constantly challenging and improving his/her personal performance (2) Work with his/her people individually and as a team to determine new targets and to develop programmes to achieve these higher standards of performance (3) Identify and continuously implement improved ways to anticipate, serve and satisfy internal and external customer needs (4) Stress the importance of developing and implementing more effective and efficient ways to improve SKB procedures, products and services through quality analysis (5) Initiate and display a willingness to change in order to obtain and sustain a competitive advantage (6) Reward and celebrate significant creative achievements (7) Develop and appoint high-performing and high-potential people to key positions (8) Help all employees achieve their full potential by matching talents with the jobs to be done and through quality performance feedback and coaching (9) Communicate with all constituents openly, honestly, interactively and on a timely basis

Lessons from being something less than global and local in thought and action

Along an evolutionary path as dramatic as going global with your branding process, there are many pitfalls to avoid. Today's "organising architect" hunts out lessons from everybody else's pitfalls. But he realises to participate now in globalising - in spite of all the lurking dangers - is essential because the spectator never wins a competition.

Here are some practical pitfalls which have been experienced with embarking on global branding processes. For obvious reasons we have disguised our sources:

•The company which raced into a global branding process so fast that it forgot to integrate the global elements of its brand's communications and it failed to encourage its local marketers to maintain the local vitality of the brand mix. Examples:

·A London advertising agency was commissioned to develop a global advertising campaign, while a New York designer was commissioned to develop the brand's packaging. Problems arose in consumers' recognition and understanding of this brand's presentation, because neither creative agency had been shown the other's brief.

·At a local level, the need in many countries for extensive point of sales materials was not only overlooked by headquarters marketing strategists but subsequently discouraged in spite of strong representation by local marketers that the brand's impact would be adversely effected.

•One company developed a novel way of extending a brand's range in the USA, which relied heavily on PR, word of mouth and building up a fashionable reputation for frequent additions to the range. Within this mix, the role of advertising was to generate PR, advertorials, word-of-mouth, and direct response mechanisms around the appearance of each new exciting line. After two years of hard and intensive marketing, the brand's success in the States was such that (re)launch of the business was made a top global priority across the company. Unfortunately, this was despatched to marketers around the world with very little supporting information on how to maintain PR and word of mouth appeal. Instead of producing "a franchise kit" of the US experience - most of which had a generalisable fashion appeal - countries were largely left to reinvent the wheel of how to create interact and sustain both PR and consumer word-of-mouth. This was not something that many of the company's local marketers had ever practised before and consequently the brand was underperforming in many local markets.

•A company informed its R&D people of a new product development (NPD) policy - future products must have Europe-wide markets. However, the performance objectives of local business units were left unaltered. R&D people were not empowered to gain the simultaneous commitment of all local marketers to refining NPD concepts or to buy into a consensus of what quality/value points particular brands should stand for. Very little real innovation has resulted in the last three years since the European product policy was instigated.

Other R&D people report that a manufacturer's brand development teamwork should begin and end with these people has often got lost in corporate processes:

·"R&D information is released to people in our company on a 'need-to-know basis.' The last people with whom I would regularly network are the brand managers. Many of them are only here for two years, and they will move on to a competitor next"

·"Almost all really useful innovations for our industry have been invented by independent research laboratories. Leading-edge R&D is too specialised these days for any manufacturer to expect to create much of it. If our company really wanted to turn R&D into a competitive advantage, it should partner world class companies in non-competitive industries, eg cement, and sponsor world class research institutes in specifically designated areas where leading-edge innovations would be an advantage to all of the corporate partners.

Straight Talk We're all familiar with the innovation blockers : top management isolation, conformism, bureaucracy, fear of change, short-term vision. They're particularly prevalent in large, well-established, structured 'we-know-it-all' organisations like mine. Most of us work for companies that innovate all the time. But most of these innovations are small, predictable, imitative and won't last. Andrew Seth (November 1994 - while managing director Lever Brothers UK and member of Lever Europe board)

Is your system of brand organisation proactive?

The acid test for any brand organisation is to make a shortlist of change factors which will impact branding across your sphere of business over the next ten years. These may include : globalisation, new and fragmented media, innovation partnerships,... (see Thinkpiece 3 for a selection). Now ask for each change factor - does the way we organise our branding process help everyone to respond proactively to change?

With the benefit of hindsight, we can look back at many local branding processes and see how inertia ridden they often were. Not only did different organisational departments have different perspectives on what branding did, but many people also had vested interests in preserving the status quo:

·Brand managers, advertising and other creative suppliers, market researchers all gained from "the more brands the better syndrome". Their job empires depended on it.

·Financial directors were persuaded that brands should be valued according to balance sheet criteria "ie proven past performance"

·Perhaps marketing directors should have fought the opposite corner "that brands are actually worth no more than the future advantages invested in them". But in practice corporate operating environments have stacked up ever increasing short-term pressures against making a stand for the future (see Table 5)

·Country or strategic business unit managers have often been charged to "do your own thing provided you meet your revenue targets"

·Brand managers have often wanted to make their individual mark whilst on particular two year tours of duties;

· Sales directors and sales people have often been left with the impression that they are out there doing the day to day fire fighting; and the conflicting signals coming from brand managers and marketers just add to the smoke

·Strategists, economists, quality controllers, product innovators did not appear to realise the organisational interconnections between their disciplines and brand processes. They may often have felt that the brand was about advertising, and therefore failed to appreciate that a brand's orientation should positively interact with the whole of the business process.

And so on.

Table 5 - Increasing patterns of short-term influence over organisations of 1980s/1990s ·adhoc management consultants (and their products selling instant results : benchmarking, reengineering, downsizing, activity based costing) ·city analyst pressures (punter capitalists on stocks, short-term reward schemes for CEOs, ever-increasing analytic focus on last 3 months' performance) ·IT models (more data on measuring the recent past) ·appraisal/reward schemes geared only to recent sales ·a corporate belief system biassed towards competitive response, and away from leadership of the company's own standards

At some stage in evolving away from the politics of local brand processes, shock tactics may be necessary for an organisation to demonstrate that it is serious about change management and reengineering its brand processes. But we are keen to stress that teamwork stems from the architect's leadership ability to refocus attitudes and unite people round competence building goals. Recognise that old branding systems were at fault in being organisationally divisive in a myriad of different ways. Get key people from functions together in pairs, eg marketing and finance, and use humour (figure 1) to start up a fresh debate on how each others' talents can support brand organisation. Changing a brand organisation is a cultural matter. Finding the right kind of human touch to launch this promotional enterprise internally requires every bit as much creativity as developing a great advertising campaign. (See also chapter 14 on Drama of leadership).

Above all, organisation architects should recognise that all corporate decision making involves continuing balancing acts between growing businesses up and cutting them down. But leading brand organisations are dedicated to the spirit of actively exploring every valuable means of growing and evolving before they think of cutting. Directed and practised in this way, the branding of leadership systems is the most vital organisational competence of all. It depends on the foresight and networking skills which the organisation architect musters across the company and is intent on enhancing through the perpetual emotion of branding.

Summary

Strong brands take advantage of change; including the structural change in the ways that the marketing process is organised in a world of glocal partnerships and competition.

Making the changeover to glocal marketing requires that the organising architect:

·evolves a networking form of organisation

·foresees the full nature of the challenges this involves

We have illustrated the risks involved and examined detailed experiences of companies whose organisation of global marketing is being transformed

Doing nothing is the biggest risk of all. The ways that 20th century marketing functions were executed to target local markets do not provide a fit organisational form for a future where the brand organisation's processes - as systems and communications platforms - must be capable of delivering:

world class quality and value,

globally and locally.

In parallel, the corporate architect must foresee how to leverage changes relating to internal company learning, external media and glocal stakeholder relationships.

Top level banner brands embody unique organising purposes; they determine what organisational goals and strategic visions are realisable, as well as vice versa. Direction given from this integrated perspective is what makes global branding succeed.

In the future, the claim that branding is a corporate core competence will mean that two organisational feedback loops are continuously working to perpetuate a company's leadership of a sphere of business:

·Banner brands must shine out from a company's brand architecture as focal points of the total brand equity

·Banner brands as unique organising purposes must be aligned with the company's ways of focusing core competences. Through this means, everything that employees learn and action can serve to confirm the company's right to lead.

(See also ThinkPiece 4 : on "flexible" companies)