Boardrooms Need To Focus On Branding

Are global Asian brands a myth or reality? Martin Roll contributed an opinion piece for China Daily Asia about the challenges and opportunities for Asian businesses to create and sustain global brands.

But why should Asian businesses brand at all? Martin Roll believes that branding and intangible assets should be on the agenda for the entire organization in Asian companies – led by the CEO and the executive team. For Asian companies to become successful, branding can no longer be delegated to the mid-level marketing function. Instead, Asian boardrooms and the CEO must take charge of the brand strategy, lead the brand development, manage its implementation and be fully involved in performance tracking and benchmarking.

Intangible assets like brands play a significant role in value creation and can become an important driver of shareholder value for many more Asian companies than today.

According to Martin Roll, strategic branding provides four strategic advantages for companies: Branding enhances shareholder value, it can become a catalyst for better leadership, it enables companies to drive a shared vision throughout the organization, and it can help to balance short- and long-term perspectives and performance.

Companies in Asia including many family-owned businesses have traditionally focused on asset-heavy industries. But it has been demonstrated by global consultancy firm McKinsey & Company that the most profitable Asian companies focus on intangibles such as human capital, exploiting network effects, and creating synergies based on brands or reputation, rather than investing in tangible assets.

Many Asian firms have competed on tiny margins against other suppliers, but they could increase their profitability and competiveness by investing in their brands – locally, regionally and globally. This demonstrates the shift in thinking that is pushing boardrooms and CEOs in Asia toward creating strong brands to differentiate themselves and consequently realize greater profits.

Most Asian firms still view branding as advertising, corporate identity or logo design. If Asian firms are to benefit from branding, they must recognize that it impacts the entire business. Executives will need to see branding not as an appendage to the existing business, but rather as an strategic infusion which seeps through the very spirit of the organization.

Reasons for lack of strong brands in Asia

Martin Roll estimates that only a few of the top global brands originate in Asia. But given the size and volume of Asian business today and the trajectory of Asia across global markets, it is evident that Asia could build more prominent global brands.

There are many reasons why Asian companies have not fostered many global brands until now:

• The diversification of businesses spanning many industries with limited overlap and synergies has been a major impediment to building brands in Asia. The prevalent mindset in Asia is based on trading, rather than branding, and the generation of revenue, rather than profit. But it is hard to create a relevant, clear and differentiated brand strategy, and build a corporate brand which encompasses all areas, when a business has its hands dipped in every pie
• Another important reason for the lack of strong brands can be found in the prevalent business structure within Asia, which consists of many small and often family-owned businesses, often with diversified business interests. The management perspective would favor short-term business wins against brand strategies which require more resources and long-term perspectives
• The implications of IP (intellectual property) protection in Asia have been a major barrier against building brands. In their own backyards, many Asian companies have faced rampant counterfeiting and infringement of IP rights. Until and unless legislation and law enforcement get better in the region, it may be a hurdle that prevents a deeper appreciation for intangible asset management in the Asian boardroom

What is the role of the Asian boardroom?

In simple terms, a strong brand is characterized by a unique brand promise (the customer focus) and an outstanding brand delivery (the organizational system and performance behind the promise). The brand promise and the brand delivery must be consistently balanced in order to build and sustain strong brand equity.

Martin Roll explains that the modern brand-driven organization is characterized by three distinct characteristics which set it apart from less brand-focused companies:

• The right boardroom mindset toward, and beliefs about, branding
• The right skill sets to build and manage brands
• The right allocation of organizational and financial resources to achieve the various business objectives and build sustainable brand equity

An important observation is that the marketing function has come under increasing pressure in recent years to demonstrate financial results. C-level executives and boardrooms must recognize this development and act accordingly.

The first change is related to the role of marketing. As marketing is increasingly taking place along the entire value chain, marketing is not the responsibility of the marketing function alone. Instead, everyone in the organization is involved. This requires a more cross-functional orientation of marketing, with a solid understanding of all the elements in the value chain. This might require an upgrade of skill sets and ongoing training of the marketing personnel among Asian firms.

The second change required is related to the outcome of marketing. For the marketing function to become an integrated part of the Asian boardroom agenda, the key issue for the future is to focus on demonstrating the financial consequences of marketing expenditures.

Finally, the Asian boardroom should recognize the critical importance of resource management in building strong brands. The more everyone throughout an organization can be trained and involved in delivering on the brand promise, the more efficient and competitive the brand strategy will become.

Creating iconic, global Asian brands

To create iconic, global Asian brands true to their roots and origin, Asian executives will have to become trendsetters to a much larger extent than today. The future perspective for Asian businesses is that, in order to be successful, Asian brands need to capture the spirit of Asia, but they also need to lead the way by creating that spirit. Asian business and brands must become trendsetters, be innovative and dare to be different.

It is time for Asian boardrooms to get rid of the inferiority complex which has prevailed for many years among Asian consumers and executives. The common belief has been that Asia did not have much to offer, and that brands from the Western world were more superior, better designed and of better quality.

This new perspective must be steeped in a more acute perspective on consumer behavior patterns. Asia is not a homogenous entity. Even more importantly, Asian countries are more and more traversed by cultural flows permeating the region: Cinema, music and fashion trends extend beyond national borders to capture the imagination of millions. Moreover, branding and brands do not operate in a vacuum, but are closely linked to developments in society, to people and to culture. Asia has much to offer the global world, and this is where branding and brands come into play for Asian firms.

Conclusion: Asian brands have great global potential

Despite Asia’s historical focus on manufacturing and trading activities, the global landscape could potentially face a wealth of new Asian brands in the coming years according to Martin Roll. Every country in Asia has its own list of aspiring brands just waiting to cross local borders, and transcend into global markets. These companies are gradually making a mark in the region, having been inspired by the industry leaders. But not many have managed to attain international recognition yet.

Asian cultures have always valued the long-term in almost every aspect of life. Asian C-level executives should use this unique strength to create more successful, global brands – but it will require a change of mindset, and bold actions in the Asian boardrooms.

Media link: This interview appeared in China Daily Asia in November 2013 (in English) – read Boardrooms need to focus on branding