Brand Winners... And Losers: IBM and AIG
The Marketing Doctor says:
Folks, another short post this week on true brand opposites. The winner is a brand that has managed to sidestep the financial mess almost entirely, while the loser is a brand that has basically defined the mess. I’m talking, of course, about IBM and AIG, two three-letter companies that draw a clear line between what it takes to build a brand and what it takes to destroy one.
IBM is a company that hasn’t been getting much press recently —and that’s a good thing in this market.
Because Big Blue’s stock has been holding up, as has its balance sheet and core businesses. In fact, the company continues to successfully expand and invest in new areas. Most recently, it’s trying to take a dominant position in water treatment. That’s right: water treatment. See that article from CNBC here.
At first, this new venture might seem beyond its brand, but on second look it is more brand extension than radical departure.
Basically, in trying to develop a more efficient computer chip, the company recognized that the same thinking that led to a more efficient computer chip could be used to regulate water usage more efficiently on a large scale. This is a brand in touch with itself and in touch with its history.
IBM has a tradition of promoting their employees to “THINK” via an internal human resource campaign that instilled a sense of commitment and loyalty in their employees. In the fifties, sixties and seventies, American white-collar workers desperately wanted to become part of the IBM family.
IBM is this week’s winner for one simple reason: many years ago its brand was in deep trouble, and it reinvented itself as a technological innovator. (Or rather, it remembered its identity as a technological innovator and a family.)
It has never looked back.
You’d think that this latest venture sounds more like something GE would have done. Maybe.
But GE is in trouble because it forgot its identity and overexposed itself in the financial sector, something that IBM never did. As a result, IBM can begin stepping into gaps it can naturally fill but would probably never have tried to when other competitors were stronger.
Stay tuned. But I think we’re going to be hearing a lot more from Big Blue.
AIG is an insurance company that broke the trust of its investors by expanding in direct opposition to the nature of its brand. See my post on the company's downfall last September here.
The latest news just adds to the hemorrhaging of brand credibility. Here’s the NY Times piece on this week’s AIG debacle, which has set off a firestorm of criticism. As if you couldn’t top last fall’s lavish corporate retreats, AIG is now doling out $165 million in bonuses, while again asking for more government dollars.
What are these guys thinking? Certainly not about the good of their brand! If they were, they would have asked their executives to forgo their bonuses so that they could thank the American people for saving their company and their jobs. For me, this is hubris at its worst —when it should be an all-hands-on-deck moment. Period. End of story.
A solid brand that might be in temporary trouble figures out ways to navigate the trouble without setting off firestorms either among employees or the public. (A recent example is how EDS, an HP company, is choosing to reduce salaries across the board rather than lay people off —a kind of group sacrifice that may very well save jobs and strengthen brand identity at the same time.)
Needless to say, sometimes the damage done to a brand is terminal, and that’s probably the case with AIG.
AIG’s only chance for survival is to recommit itself to its core business and to the values that made it grow in the first place —to rededicate itself to the stable and steady business that lies at the heart of the insurance company brand. For this to happen, trust must be restored. Among other things, a name change would definitely be in order, as well as an aggressive marketing campaign that drives home the reformed brand.
And remember, it’s always easier when you keep marketing and branding in mind.
TODAY'S TANTILLO TAKEAWAY -
Once you have determined the core identity of your brand, you will be able to grow faster and with confidence.