I just read an outstanding piece by Olivier Blanchard, principal at BrandBuilder Marketing, on the mistreatment of brands by lousy CEOs.
See Blanchard’s blog post: Killing America’s brands, one lousy CEO at a time (It’s a bit lengthy, but worth the read).
In this piece, he rants against ineffective leadership at Chrysler and GM, whose CEOs, he says, have focused to their detriment on aggressive cost-cutting, efficiency and short-term results in favor of rebuilding the brands that once made them successful. As a result, the downfall of these auto giants have accelerated.
I think Blanchard’s point is a good one. Too often, business leadership focuses more on short-term profitability (making the numbers). By doing so, they may be running the business, but they’re not managing the brand.
A brand management mindset is different. Brand management rises above profit and loss and focuses instead on value. And value wins customers, long-term revenues and opportunities for growth. Managing costs and production efficiencies may create value in the short-term, but you can only squeeze so much juice out of a lemon.
As Blanchard says:
“Repeat after me. No major brand ever rose to a position of market dominance by focusing on cutting costs.”
Perhaps it’s no coincidence then that Ford appears to have emerged as the best positioned among Detroit’s Big Three.
We see a lot of positive chatter about Ford these days.
One reason, no doubt, is that Ford is the one American auto-making giant that hasn’t asked for any loan money from the federal government. By doing so, the company seems to have claimed the position as the soundest, most dependable and most likely-to-stick-around American automaker.
That’s not to say they won’t ask for support. And by no means is Ford out of the woods. They still face an uphill climb. Their situation is still precarious.
But Ford seems to have gotten it right on many other fronts. And a large part of this seems to come down to the right mindset – a brand management mindset.
You can see it in the words of Ford CEO Alan Mulally himself. When asked about Ford’s healthier financial position vis-à-vis its Detroit rivals, he mostly talked about the value of the Ford brand. And he told the story about Ford’s focus and work over the past few years on ensuring that every new vehicle in the future was best in class in quality, fuel efficiency, safety and value.
And it seems as if the brand is performing. Ford is a recognized leader in safety and in recent reviews has received high praise for reliability and quality, including from the impartial magazine Consumer Reports. In fact, Ford’s reliability and quality is now said to be on par with Toyota and Honda.
Ford has also made meaningful progress on fuel efficiency, with a greater number of hybrid models this year and plans to replace almost half of its models in today’s showrooms with environmentally-friendly fuel efficient hybrids by this time next year. Ford already boasts the most fuel efficient SUV on the market.
Ford has had its share of cost-cutting and efficiency efforts, don’t get me wrong. But compared to its Detroit rivals, Ford seems to have put a lot more emphasis and substance behind its promise of being there with the quality vehicles people want.
Delivering on your promise is the ultimate test of your brand. That’s where respect comes from. It’s where brand fans come from. It’s where long-term revenue comes from.
We’ll have to wait and see what happens with all three major American auto companies, but Ford’s brand management mindset may be giving it the edge.
As Blanchard says, one must drive your business forward with a focus on building the brand, on creating and pleasing customers. One must manage the brand, not just the profit and loss columns.
I’m certainly no expert on the American auto industry, so help me out.
Do you think Ford has set itself apart with a better focus on its brand, or are other factors at play?
Why does Ford seem better positioned at this moment to succeed than its Detroit rivals? Or is it?
Do you think Blanchard is right about CEOs failing because of brand neglect?