Murmuration #9, Rome, Italy, 2009 © Paolo Patrizi.jpg
Murmuration #5, Rome, Italy, 2009 © Paolo Patrizi.jpg
E.U.R., Rome, Italy,2009 © Paolo Patrizi.jpg
Quartiere Giuliano Dalmata, Rome, Italy, 2009 © Paolo Patrizi.jpg
Lungotevere Marzio, Rome, Italy, 2009 © Paolo Patrizi.jpg
Murmuration #9, Rome, Italy, 2009 © Paolo Patrizi.jpg

Strategy for disruptive organisations


Strategy for disruptive organisations

A.G. Lafley is the former President and CEO of Procter & Gamble and Roger Martin is Dean of the University of Toronto’s Rotman School of Management. In Playing to Win: How Strategy Really Works, these two personal heroes of mine state: “Strategy can seem mystical and mysterious. It isn’t. It is easily defined. It is a set of choices about winning. […] it is an integrated set of choices that uniquely positions the firm in its industry so as to create sustainable advantage and superior value relative to the competition.”

Here, I explore three key components:

What is your winning aspiration?
The purpose of your enterprise, its motivating aspiration.

Where will you play?
A playing field where you can achieve that aspiration.

How will you win?
The way you will win on the chosen playing field.


Brand value is now most companies’ single biggest asset

In 1980 virtually the entire market capitalisation of the Standard & Poor’s 500 companies consisted of tangible assets. In 2010 tangible assets accounted for only 40 to 45 per cent of the S&P 500 companies’ market capitalisation. The rest of their capitalisation consisted of intangible assets, and about half of that—more than 30 per cent of total market capitalisation—came from brand.

Businesses are now only as strong as their brands and nothing else offers business leaders so much potential leverage.

Yet brand is also one of the most misunderstood aspects of business strategy. Branding is sometimes considered to be merely an advertising function. And many managers and business writers hold the view that branding is about the management of product image, a supplementary task that can be isolated from the main business of product management.

Brands are important to organisations simply because they are vitally important to people. They shift the locus of business to marketing activities such as providing meaning and better designed experiences.

Simply, brand is a person’s cumulative experience had with every aspect of an organisation.

What is brand?

  1. Branding is a strategic point of view, not a select set of activities
  2. Branding is central to creating customer value, not just images
  3. Branding is a key tool for creating and maintaining competitive advantage
  4. Brands are cultures that circulate in society as conventional stories
  5. Effective brand strategies must address the four distinct components of brand value:
    • Reputation: Brand cultures shape perceived product quality;
    • Relationship: Brand cultures shape relationship perceptions;
    • Experiential: Brand cultures frame consumer experiences; and
    • Symbolic: Brand cultures express values and identities

How does brand create value?

  1. Encourage more people to buy the brand
  2. Encourage people to buy the brand at a price higher than that commanded by the alternatives
  3. Encourage people to keep buying the brand
  4. Encourage people to buy the same brand but for new occasions or in new categories
  5. Do all of the above, but more efficiently

Unfortunately, many marketers and CEOs appear to be fixated on the first and last of these strategies to the exclusion of the middle three, and they particularly overlook the strategy of justifying a price premium. The ultimate role of a strong brand is to command a price premium over comparable products. All too often, brands chase additional volume at the expense of their price premium and future profit stream. It is debatable whether such tactics pay off in the short term, and all the evidence suggests that they undermine long-term value.


Walter Landor, the founder of legendary brand and marketing consultancy Landor Associates was once asked how, exactly, does a company go about turning a product into a brand. Mr Landor, who passed away in 1995, answered:


“Products are made in the factory, but brands are created in the mind.”


In other words, brands are subjective manifestations of consumer intent and opinion, are not so easily manipulated, and are just as often as not, an unintended consequence.

Murmuration #5, Rome, Italy, 2009 © Paolo Patrizi.jpg

What is a brand?

What is a brand?


Consider a new product that a company has just introduced. Although the product has a name, a trademarked logo, unique packaging, and perhaps other unique design features—all aspects that we intuitively think of as the brand—the brand does not yet truly exist. Names, logos, and designs are the material markers of the brand. Because the product does not yet have a history, however, these markers are empty. They are devoid of meaning. Now, think of famous brands. They have markers, also: a name (McDonald’s, IBM), a logo (the Nike swoosh, the Travellers umbrella), a distinctive product design feature (Harley’s engine sound), or any other design element that is uniquely associated with the product. The difference is that these markers have been filled with customer experiences. Advertisements, films, and sporting events use the brand as a prop. Magazines and newspaper articles evaluate the brand, and people talk about the brand in conversation. Over time, ideas about the product accumulate and fill the brand markers with meaning. A brand is formed.

A brand emerges as various “authors” tell stories that involve the brand. Four primary types of authors are involved: companies, the culture industries, intermediaries (such as critics and retail salespeople), and customers (particularly when they form communities). The relative influence of these authors varies considerably across product categories.

Brand stories have plots and characters, and they rely heavily on metaphor to communicate and to spur our imaginations. As these stories collide in everyday social life, conventions eventually form. Sometimes a single common story emerges as a consensus view. Most often, though, several different stories circulate widely in society. A brand emerges when these collective understandings become firmly established.

Marketers often like to think of brands as a psychological phenomenon which stems from the perceptions of individual consumers. But what makes a brand powerful is the collective nature of these perceptions; the stories have become conventional and so are continually reinforced because they are treated as truths in everyday transactions.

—Douglas B. Holt

Prior to the launch of the Cultural Strategy Group, Holt was a professor at the Harvard Business School and then the L’Oréal Chair in Marketing at Oxford


A model of brand based on the semiotics of Charles Peirce. It is framed around four main ideas:
1. a brand is more than a name or symbol
2. customer experience is the essence of good branding
3. perceptions of a brand can be measured
4. brands are a form of sign

E.U.R., Rome, Italy,2009 © Paolo Patrizi.jpg

Why ideals matter

Why ideals matter

Aspirations are the guiding purpose of an enterprise

Think of the Starbucks missions statement: “To inspire and nurture the human spirit—one person, one cup, and one neighbourhood at a time.” Or Nike’s: “To bring inspiration and innovation to every athlete* in the world.” (The additional note, indicated by the asterisk, reads: “*If you have a body, you’re an athlete.” Each is a statement of what the company seeks to be and a reflection of its reason to exist. But a lofty mission isn’t a strategy. It is merely a starting point.

What does winning look like for your organisation? What, specifically, is its strategic aspiration? These answers are the foundation of your discussion of strategy; they set the context for all the strategic choices that follow.

There are many ways the higher-order aspiration of a company can be expressed. As a rule of thumb, though, start with people (customers) rather than money (stock price). Peter Drucker argued that the purpose of an organisation is to create a customer, and it’s still true today. Consider the mission statements noted above. Starbucks and Nike, each massively successful in its own way, frame their ambitions around their customers.

That is the single most crucial dimension of a company’s aspiration: a company must play to win. To play merely to participate is self-defeating. It is a recipe for mediocrity. Winning is what matters—and it is the ultimate criterion of a successful strategy. Once the aspiration to win is set, the rest of the strategic questions relate directly to finding ways to deliver the win.

The ideal is the brand’s inspirational reason for being. It explains why the brand exists and the impact it seeks to make in the world.
— Jim Stengel

Ideals: The New Engine of Business Growth

Doing well by doing good—is that really attainable? We have always thought so, but now we have proof. The most successful brands and businesses in the world are built around something other than just making profit. They are built around ideals.

The evidence is in Jim Stengel’s new book, Grow: How Ideals Power Growth and Profit at the World’s Greatest Companies. With the help of Millward Brown Optimor, Jim identified the 50 brands that ranked highest on both consumer bonding and value creation over the past decade. As Millward Brown Optimor worked with Jim to understand what made these brands so successful and fuelled their growth, they observed that the best businesses are ideals-driven.

What Is a Brand Ideal?

A brand ideal is a higher purpose of a brand or organisation, which goes beyond the product or service they sell. Jim explains it this way: “The ideal is the brand’s inspirational reason for being. It explains why the brand exists and the impact it seeks to make in the world. A brand ideal actively aims to improve the quality of people’s lives. It creates a meaningful goal for the brand—a goal that aligns employees and the organisation to better serve customers.”

Quartiere Giuliano Dalmata, Rome, Italy, 2009 © Paolo Patrizi.jpg



Brands with a higher purpose have the edge
in the marketplace

In Grow, Stengel, former Global Marketing Officer for Procter & Gamble, argues that potent brands—and the ideals and behaviours they inspire—represent one of the most valuable qualities a brand can have: a purpose that goes beyond the benefit of the service or product itself.

“This is not corporate social responsibility, it’s not cause marketing, and it’s not a strategy for philanthropy; it’s a business strategy,” Stengel says. “Your philanthropy can come out of it, just like your R&D and HR come out of it. But once you choose your purpose—your mission—everything else should come out of that.Based on his record of turning around brands like Pampers (by focusing on caring for kids) and Jif Peanut Butter (by making it preservative-free to satisfy “choosy moms”), Stengel tested his hunch that there is business value in defining and living out a clearly defined brand ideal. He enlisted global research firm Millward Brown to scour its database of 50,000 brands in 40 countries to see which companies had achieved the most growth between 2001 and 2011 in two categories: financial value and consumer bonding. Through this process, Stengel created a list of 50 brands—“the Stengel 50”—that had built loyalty by focusing on ideals, and found that:

they outperformed the S&P 500
by more than 400% over the decade.

“Consumers see [the Stengel 50] brands as purposeful,” explains Benoit Garbe, managing director for Millward Brown Optimor in Asia, Africa, and the Middle East, who worked with Stengel to develop the list. “They see that those brands have an impact on their lives. They believe those brands exist beyond making a profit. They feel they’re more authentic.”


How much of the Walt Disney Company’s market cap comes from that big cursive D? Warren Buffett knew. In his biography The Snowball: Warren Buffett and the Business of Life, it recounts that Buffett bought Disney because the stock was trading for less than the value of Disney’s Snow White brand.

Millward Brown, part of Kantar Group, the insights arm of WPP plc, and the world’s second largest market research org—

Strong brands, defined by the perceptions of their target consumer, not only create more business value but also command higher share prices as a result. This graph compares the share price performance of companies that are strong brands in Millward Brown BrandZ’s portfolio with the S&P 500 and shows that over time, strong brands have significantly outperformed the average, showing a 25% improvement in share price over the S&P 500 since April 2006 in spite of the impact of the Great Recession brought on by the 2007 financial crisis.


Credit Suisse is a Switzerland-based multinational financial services holding company—

“We believe a strong brand is one of the most powerful and sustainable advantages in modern industry, but one that is often ignored by financial markets. Strong brand companies have consistently generated outsized long-term growth and returns for shareholders. We […] found that an equal-weighted index of companies spending at least 2% of sales on marketing outperformed the S&P 500 by more than 400 basis points annually since 1997. The returns skyrocket if one can consistently screen for the top performing brand companies: the top quintile of these companies outperformed the market by an amazing 17% annually over that period. While marketing spend may be an overly simplistic proxy to identify brand companies, it at least tells us that companies focused on brand building perform well, and that’s even before any real filtering process.”


— The three essentials to a brand’s financial success —


Drawing on thousands of brand equity studies and on a recent, groundbreaking validation study that links survey responses with actual purchase behaviour and neuroscience data, Millward Brown has established that a brand’s financial success depends on its ability to be:



Rather than try to figure out which brand is best, people are drawn to the one they find most meaningful. Without meaning, brands would have no value; everything would be a commodity, and a physical or tangible advantage would eventually erode as competitors copy, blunt, or supersede it. On average, brands that are highly meaningful, different, and salient derive over three times more of their volume from the strength of the brand than those that are low on meaning, difference, and salience.



Experiments in behavioural psychology have demonstrated that when similar alternatives compete against each other, they all become less attractive. When a consumer is considering less familiar brands, the one offering something truly different will be chosen more often and can charge a higher price. On average, brands that are highly meaningful, different, and salient command a price 14% higher.



Salience gives a brand an advantage because of the habitual nature of human behaviour. Consumers rely on mental shortcuts, or heuristics, when they make their brand decisions, and they assign greater importance to things that have ready mental availability. The effect is that consumers will often choose the brand that is the most salient. On average, brands that are highly meaningful, different, and salient are four times more likely to grow value share in the next 12 months, with an average increase of 6.9% per year.

Lungotevere Marzio, Rome, Italy, 2009 © Paolo Patrizi.jpg

Think, feel, do

Think, feel, do

Brand experiences live entirely in the mind of your audience. That’s why it’s so hard to define and discuss. A brand experience is not a package, it is not a retail environment, and it is not an advertisement. All of those elements contribute to a brand experience, but none of them are the brand experience. A brand experience isn’t tangible. It’s the byproduct of our thoughts, our feelings, and our behaviour. It’s also highly personal. There’s no way for me to know whether or not your experience with a given brand matches my experience.

To generate brand equity you deliver an experience that meets or exceeds the expectations set by your brand promise. A great brand experience surpasses your audience’s expectations when you deliver on your promise, and it lingers in your audience’s memory well after that moment of interaction. In other words, the best brands experiences surprise or delight us when we encounter them, and they leave a strong impression afterward. In fact, brand experience is the primary means by which we actually process a brand’s true character and personality.

In a 2009 study that appeared in Journal of Marketing, the branding community received a useful framework for measuring the strength of a brand’s experience. Using quantitative methods, this study divided the brand experience into four components:

  • Sensory: when a brand makes a strong impression by appealing to our five senses
  • Affective: when the brand conjures strong feelings or sentiments
  • Intellectual: when the brand makes us think more, or induces us to think in a specific way
  • Behavioural: when the brand stimulates us to do things or change our behaviour as a result of the experience

Each of these four factors could be independently traced to what differentiates one brand experience from another. They are also reliable predictors of brand attachment and brand preference. For simplicity’s sake, you need to remember only three: A brand experience influences what we think, feel, and do as a result of interaction with the brand. Think, feel, do.

To truly surpass the expectations of your audience at the point of delivery, these three dimensions of experience differentiate the okay brand experiences from the really great brand experiences.