The ideals of human perfectibility and of achievement are authentic anti-dotes to the existential anxiety of guilt. What is true for an individual isalso true for our institutions. This understanding of existential guilt willultimately lead us to measure all institutions – such as a business, thefamily, education, the law, commerce and politics – by the degree towhich they support the development of human potential.
The Age of Enlightenment was a period of unprecedented growth in termsof freedom, knowledge, toleration and commerce. Its champions, such asBentham, Locke and Smith, believed in the idea of human potential andprogress, and changed the way we think about the world. The enlight-enment created the modern age, but the pursuit of happiness it espousedand our sense of well-being are no longer so certain. In the 21st century itis no longer axiomatic that increased wealth means a better life. Whatprogress now means is not so clear. Research shows that the correlationbetween wealth and happiness begins to disappear once people reachincomes of above $10,000 GDP per head. Equally there is no absolute corre-lation between income and life expectancy. For example, African Americanmen, although many times wealthier than the men of one of the poorest
states in India, Kerala, have a lower chance of reaching old age. As theNobel prize winning economist Amartya Sen says (2000: 14), ‘Theusefulness of wealth lies in the things that it allows us to do – thesubstantive freedoms it helps us to achieve. But this relation is neitherexclusive (since there are significant influences on our lives other thanwealth) nor uniform (since the impact on our lives varies with other influ-ences).’ If wealth and with it consumption can no longer guarantee ourhappiness, the question remains as to whether it can make our lives richerthrough enhancing our freedom. And can the much criticized world ofbrands make a real contribution to this? The challenge here is to rethinkthe way brands work and to reorient them clearly towards people.
In the era of Adam Smith and Daniel Defoe business became central to
the modern world. For the first (and perhaps the last) time it received apositive press. Since then the business world, while of intriguing interest,has come to be seen negatively. Writers such as Thackeray, Dickens, EMForster and DH Lawrence portrayed the businessman as cold, cynical andmanipulative. A character such as Gerald Critch in Women in Love
typifiesthe business tycoon of literature. He is efficient and ruthless, driven by adesire to succeed and willing to trample over the interests of hisemployees. He is a self-centred man in thrall to machines and systems. Hebelieves that his will-power can overcome all obstacles. Yet he is unable todevelop true relationships. It is telling that Lawrence, who uses warmthand cold symbolically to express life-giving power and spiritual death, letsGerald die in the Alpine snow. Gerald is a metaphor for the overweeningambition and pride of every fictional business character from OrsonWelles’s Citizen Kane to Gordon Gekko in Wall Street
. It is as if the desire tocontrol and manipulate is inherent in the business psyche and is untem-pered by any depth of self-knowledge.
The idea of the brand is central to much of the criticism of business. This
is because the brand is where the organization most overtly interacts withpeople and creates the opportunity for manipulation. The writer NaomiKlein’s argument in the seminal book No Logo
is that the overly powerfulorganization does indeed exploit its customers by restricting competition,charging higher prices and hiding the truth of the means of production.
These are valid criticisms and deserve attention. However, before weaccept this view completely we should also recognize that brands canincrease choice, enhance freedom and provide enjoyment. This suggeststhere is nothing inherently wrong with the concept of branding itself, but
that managers and employees in an organization can act with good or badintent. To encourage the former and discourage the latter, managers needto understand that it is in their business interests to promote the good. Thiswill never deliver perfection, but it can begin to change the image of thebrand at large and put the brand back where it belongs – on the side of theindividual. Thus, this book does not aim to refute the negative image ofbusiness in general and brands in particular. Nor does it seek to attackbusiness. Rather it recognizes that business can be a force for evil, but it canalso be a force for good. Brands can enrich people’s lives or manipulatethem. Employees can find fulfilment at work or entrapment. The task is tocreate a culture and system where the focus is more consistently focusedon the positive.
A brand is something that is owned by buyers and other stakeholders.1This is an idea that is sometimes difficult to grasp, but it indicates that thepower in a relationship between an individual and an organization is notnecessarily where we think it is. The argument is this: just as capital is aconcept, so is a brand. Although a brand is related to a physical product orservice it is itself immaterial. It is a transforming idea that converts thetangible into something of value. The key question is how does it managethis transformation? It does so by delivering something of value. Thus abrand only exists in a buyer’s mind and it is the buyer who has the powerto begin, sustain or terminate a relationship with it. This fact creates animmediate problem of measuring the value of a brand because thecompany does not control the life of the brand – the customer does. Brandvalue is determined by an understanding of likely future performance andpredicted cash flows. However, these are defined in large part by anextrapolation of past customer acquisition and loyalty.2 And as theexample of Arthur Andersen demonstrates customer loyalty can disappearin an instant.
However, while buyers have the power, they are also swayed by their
own needs and desires. These will be both functionally and emotionallydetermined and can be met by the acquisition of relevant products. Thisneed is partly to do with the intrinsic value of the product but mostly to dowith the transformational quality of the brand concept. We are willing to
pay extra to an organization for this because of the perception of addedvalue. This is an issue of trust. We buy Puma shoes, Diesel jeans and Applecomputers because we trust the authenticity of these brands. We believefrom past experience and from the reputation of these products that theywill fulfil our brand needs. This creates a position of vulnerability. Werarely have complete knowledge of a product and its performance, so wehave to trust that the product we bought last time will confer the samebenefits if we buy it again. If the brand is trustworthy it reduces anxietyand doubt. It makes our decision making easier and safer. As Alan Mitchell,one of the contributors to this book, notes, ‘Brand is a specific tool by whichwe make real markets work: a tool which real people use to navigate theirway to real value exchange. The reason why brands have become soimportant is because they are so good at helping to create efficientexchange.’
We see this exchange and trust-building process at work all the time. For
example, imagine a piece of software advertised by an entirely unknownname – we would be much more cautious about buying it than if it comesfrom a name we know, such as Adobe. There is still no guarantee that it willmeet our expectations, but we can be reassured that what we know of thecompany’s reputation means it should perform to certain standards andthat if it does not there is recourse to compensation. However, this buildingof trust is not instantaneous – it takes time. We deconstruct the messagesthat we receive. We read newspapers, talk to our friends, look in shopwindows and observe others. If these messages are consistent we may bewilling to try a product. If the experience of use is consistent and the after-sales service is good we may repeat-purchase it and become a brandenthusiast and advocate. We would then expect the performance of theproduct to be broadly consistent with our last experience – we begin totrust the brand and to become willing to allow the company to try to builda relationship with us. Nonetheless the freedom to choose to accept thisrelationship or not is ours.
Brands that enhance our sense of well-being and freedom further our
sense of self. They can enhance our higher needs for esteem, socializationand self-actualization. These are people-centric brands that help us toobtain value. Brands can also disappoint. They can manipulate our beliefs,they can be meretricious and they can try to limit freedom of choice. Theseare seller-centric brands that operate from the perspective of the brandbuilder. That they act in this way may be expedient, but it does not build
long-term value for the brand and it undermines the very reason we payfor the reassurance of brands: trust.
Most organizations know that keeping the long-term trust of the customeris central to their success and many companies do deliver. Yet there are alsosurprising failures and these can have a profound impact on customers,employees and shareholders. There will of course always be mistakes anderrors of judgement but in some cases the roots go deeper to the nature ofbusiness and its role in society. These factors can be clustered into threebroad areas: expedience, exaggeration and execution.
‘The dominant values in most businesses and public sector organizationsare expedience and efficiency. They value what works, often at theexpense of what has meaning and what a wider view of social responsi-bility might entail’ (Koestenbaum and Block, 2001: 276). The commonlyheld view of business – especially in the Anglo-American corporate world– is that it exists to serve the interests of shareholders. Although this view-point is debatable and much of the rest of the world adheres to a morebalanced view based on stakeholder capitalism, the reality is that theUnited States alone accounts for 40 per cent of the world’s economicactivity. The clear accountability for chief executives in the US model is toprovide the best possible returns for the owners of the business. Ideallythis should be a long-term position. It is always possible to boost short-term performance by expediency – downsizing, re-engineering,accounting procedures – but these often do little for sustainability. As LouGerstner, the former CEO of IBM, observes, there is an obsession amongsecurity analysts with the next quarter’s performance and with revenue.
The danger in this is that ‘a preoccupation with revenue can also lead tomaximizing short-term results at the expense of long-term competitiveposition’ (Gerstner, 2002: 269). This pressure to perform, not only amongchief executives but at all levels, and the fixation with short-term numbersare the fundamental source of distortions. The impact of this on a brandvaries. Short-term thinkers who are interested in fast returns and their
next career move will tend to be expedient in their management of abrand, while managers with a long-term focus will see things in terms ofthe development of the brand and its relationships with customers. As anillustration of alternative ways of thinking, take the relative positions oftwo healthcare companies.
As reported in the summer of 2002 (Koerner, 2002), the British drug
company GlaxoSmithKline was basking in the success of its new anti-anxiety drug, Paxil. From its approval by the US Food and DrugAdministration in April 2001 it had become the number two SSRI (selectiveserotonin reuptake inhibitors) drug – widely used in the treatment ofmental disorders. The disorder it was treating was general anxiety disorder(GAD) – something that US news reports estimated affected more than 10million people in the United States. GAD, according to the press and tele-vision features, ‘left sufferers paralysed with irrational fears’ (Koerner,2002). Actually, Paxil had been around since 1993 as an anti-depressiondrug, but had made little headway against better-known competitors. Thesolution was to tap into people’s social problems and reposition Paxil as ananti-anxiety drug. SmithKline, as it then was, found in The Diagnostic andStatistical Manual of Mental Disorders
a rare condition known as socialanxiety disorder, a debilitating form of shyness. As entries in the Manual
tend to act as a proof of a disease for the FDA and because the drug alreadyexisted, there wasn’t the same long process to market as a new drug. As thetrade journal PR News
put it, the goal was now to ‘position social anxietydisorder as a severe condition’ (Koerner, 2002). To this end SmithKlinebegan a campaign to market the disease. It began with a poster campaignthat bore the insignia of a group called The Social Anxiety DisorderCoalition and its three non-profit members. However, this wasn’t a grass-roots body but rather something constructed by SmithKline Beecham. Theother advantage of a campaign promoting a disease rather than a cure isthat companies don’t have to detail the side effects of the drugs. In additionto the poster campaign there was a series of TV, radio and press releasesclaiming that social anxiety disorder affected one in eight people in theUnited States. Eloquent patients talked about their problems, and membersof the medical profession (some paid consultants to SmithKline Beecham)talked up the disease. The consulting firm Decision Resources predictedthat the ‘anxiety market’ would expand to at least $3 billion by 2009.
In another market sector this story might not be so uncomfortable. We
might imagine a baking product being repositioned from one type of ingre-
dient usage to another. The idea of promoting disease, especially one thattargets vulnerable people, seems less palatable, because unless it is genuineit feels expedient. It is seller-centric.
Contrast this example with Baxter International (Hammonds, 2002).
One of Baxter’s products was a dialysis filter that was made by a companyacquired by Baxter in 2000 called Althin Medical AB. In the summer of 2001patients in Madrid and Valencia who were undergoing dialysis treatmentusing equipment that featured the Althin filter died. It wasn’t clear as tothe source of the problem, but the filters were a common link. Baxterrecalled the products in Spain and instituted an investigation, but therewas no evidence of product failure. Then similar deaths occurred inCroatia. Baxter announced a global recall and then put together a team of27 people from different disciplines to try to locate the problem – theyfound nothing, but then a quality engineer in the Swedish plant noticed afew bubbles on the recalled filters. When the filters leaked they wereinjected with a solution to locate the problem. The solution was non-toxic,but the toxicologists theorized that it gasified when heated to bodytemperature, causing a fatal embolism. There were still doubts about thisand it didn’t explain why the problem had not occurred before. Still, thispresented Baxter with a dilemma – how to act appropriately. The companyhas a series of values – respect, responsiveness, results – that it uses todefine its actions. First of all, Harry Kraemer Jr, the Chairman and CEO ofBaxter, apologized and then the company shut down Althin, taking acharge to earnings of $189 million. The company notified other rivalmanufacturers and over the next few months reviewed its procedures toprevent repeats in another area of the business. Additionally Kraemerrecommended that his performance bonus be cut by 40 per cent and thattop executives take a 20 per cent cut. As Keith Hammonds, writing in FastCompany
, observes about the dip in the stock, but its rapid recovery:
The Message to CEOs: Investors like honesty, including public apologies.
(Kraemer visited New York to apologize in person to the president ofCroatia). So, it turns out, do employees. Kraemer was flooded with emailsand phone messages from appreciative workers… To him, there isnothing extraordinary about what Baxter has done. This is simply howorganizations and their people should behave.
The Baxter case demonstrates the willingness of managers to think long-term about the responsibility of the organization to the people who use itsproducts. As Larry Elliot and Richard Schroth note, ‘creating the culturewith the right orientation requires leadership from the top and work bythe entire company. You do not turn it on and off. Your culture is eitherbased on candor or honesty or it is not’ (Elliot and Schroth, 2002: 111).
If we want to sell something like a house or a car to someone we tend tooverstate virtues and underplay any failings or limitations. Equally whenmarketers promote brands there is a tendency to exaggerate. In simpleterms the goal is to project an image that taps into people’s perceivedvalues and lifestyles. For the individual, the process of considering brandsis a cathartic process that helps them define their own identity. However,this is not static – the transformational potential of brands means that aperson’s sense of identity is forever changing in tune with receivedmessages. There is a sense of illusion here. While the language of brandpromotion can overstate, we are willing recipients of the half-truth. AsCamus’s character Meursault in L’Étranger
demonstrates, an individualwho tells the truth is a rare and difficult person. We allow ourselves to bedeceived by the language of marketing because in part it suits us to do so.
The existentialist philosopher Peter Koestenbaum points out that we haveto accept this untruth and illusion for a sense of well-being. It is simply toouncomfortable to accept the reality of ourselves. The implications of thiscan be negative. Just as the character J in Three Men in a Boat
convincedhimself he had everything in the medical dictionary from A to Z, apartfrom housemaid’s knee, by simply equating the symptoms he read aboutwith his own feelings, so we have the potential to convince ourselves thatwe are afflicted by SAD or a similar illness. On the other side we canconvince ourselves to do good. A brand can make us better people.
Take the example of Future Forests. This company has a very simple
idea: to save the planet by planting one tree at a time. Global warming is aconcept that is so large that most people feel they can do little to tackle it,but Future Forests has focused in on people’s sense of individual responsi-bility and targeted its brand accordingly. It enables people (andcompanies) to understand their individual contribution to global
warming through the amount of CO , carbon dioxide, they produce (from
turning on their TV sets, running their cars, going on holiday etc) andthen to understand how they can cut their emissions down, and thencompensate for them by paying to have trees planted (which absorb CO )
or fund climate-friendly technologies like wind power (which balance outCO emissions). So, for example, individuals can choose to ‘neutralize’ the
1 tonne of CO from driving their car, by planting five trees per year in a
long-term forest of their choice with Future Forests (CarbonNeutraldriving). This gives customers a positive sense of empowerment. FutureForests argues that forestry is a very efficient way to absorb CO emissions.
Avis Europe, which is one of their biggest customers, notes that theinvolvement in tree planting has led its people to consider the whole issueof environmentalism more carefully. Future Forests’ co-founder SueWelland says:
Our position on that is that you can’t plant your way out of globalwarming. But if you’re trying to engage people, you have to find thethinnest edge, which is something that people really understand and istangible. People don’t understand the language [of global warming] andcan’t find the attachment points. We got rid of all the nebulous stuff andbrought it down to bite size, easily understandable chunks. A tree is asymbol. It’s a way into people. It’s a gateway experience.3
One of the impressive aspects of Future Forests’ brand is its belief in trans-parency. Guided by its brand values, it puts all corporate information itcan on its Web site. The language is informative – pointing out the issuesand providing the opportunity for the solution. The approach to themedia is the same: provide substantive information and keep the organi-zation open to the outside. As a virtual company, Future Forests feels thisintegrity is vital to building the trust of all its audiences.
Organizations are not inherently evil. We are the individuals whopopulate these organizations and we can make good or bad decisions.
The way we act is defined at least in part by the broader influence ofsociety (which in turn is influenced by business). If the world acceptsand perhaps praises power, unbridled greed and exploitation, then we
should not be so surprised if some individuals behave in a limited way.
Alternatively if we are serious about individual responsibility, environ-mentalism and the alleviation of global poverty, then individuals aremore likely to think about the broader accountability of their decisions.
This is not to argue that every decision a business makes needs toconsider global poverty, but awareness of the issue adjusts the mindset ofthe decision maker. The difficulty for modern organizations is that devo-lution of decisions and the empowerment of individuals has reducedcontrol. Overall this is a good thing for both business and the individual,but it does create executional problems, especially if employees are notunited by a common and positive set of values. Just think about theimpact of Nick Leeson’s decisions on the long-established Barings Bankbrand.
The onus therefore must be on the organization to define clearly its
brand values and to encourage individuals to act in accordance withthem. Only then will people at all levels make decisions that are notnarrowly defined but take into account the full responsibilities of abusiness. An interesting example of this is the brand Nike. Nike is a chal-lenging brand and part of its power and appeal to customers has been itswillingness to support the cause of athletes by running campaigningadvertisements and attacking the International Olympic Committee. Thisis a brand built on irreverence. However, this positive impression hasbeen tempered in recent times by the company’s record in managing itsemployment policies, especially in the developing world. Nike has longmanufactured in the Far East but, because it subcontracts work to localfactory owners, it disassociated itself from the exploitative conditions ofits factories and the use of child labour. It failed to see the connectionsbetween its brand, which espouses honesty, competitiveness andteamwork, and the idea of children working in sweatshop conditions. AsNelson Farris of Nike says, ‘One of the biggest mistakes we made was tothink we don’t own the factories, so that’s their problem. That’s when werecognized we were more powerful than we realized and, as a conse-quence, people expected more of us. Employees were embarrassed anddisenchanted and confused. The media had sweatshops and child labourin every sentence.’4
To its credit Nike has moved to independent and open auditing of its
global employment record, but the failure to recognize the connectednessof decisions was the primary cause of the criticism of the brand.
The subsequent chapters of this book will explore from the perspective ofvarious authors the problems that brands face, but more importantly theywill offer solutions to improving the role and the performance of brands.
This book is not just a critique of the world of brands, but rather a set ofideas as to how brands and branding can contribute to progress. The solu-tions fall into a number of broad categories: self-correction, persuasion andpressure, democracy and transparency, and legislation.
Adam Smith’s championing of free markets was his reaction against thepower of vested interests in 18th-century Britain: ‘people of the same tradeseldom meet together, but the conversation ends in a conspiracy againstthe public, or in some diversion to raise prices’. He believed that freedomequated to a greater degree of fairness for people. However, he was not infavour of free markets in all circumstances. He also recognized that certainaspects of society, including the need to provide well-funded publiceducation, should be legislated for and supported by the state. On thewhole we should recognize that free markets are a good thing and thatmany of the problems that exist for developing nations are not the result oftoo much freedom, but vestiges of government interference, such as agri-cultural subsidies in the European Union and trade barriers under oneguise or another. One of the great virtues of free markets is their ability forself-correction. Nowhere is this clearer than the influence of buyers onbrands. Consumers do not always adjust their buying behaviour becauseof the positive or negative actions of companies, but their attitudes areswayed by them and businesses are concerned about the impact of publicperception on their reputations and brands. This type of failing can simplybe because the brand in its pursuit of growth or profitability forgets theprimacy of customers. (Research by Gallup (2002) reveals that employeesbelieve that only 66 per cent of company leaders are trying to do what isbest for their customers, and even fewer – only 44 per cent – believecorporate leaders are trying to do what is best for their employees.)
This lack of consumer orientation has been obvious in the case of
McDonald’s. Its first ever quarterly loss of $343.8 million in 2003 was clearlydue to its focus on its real estate and franchise revenues and its lack ofinterest in customers. There has been a failure to generate genuine newproducts and there has been a record number of complaints (includingcomplaints about the way complaints are handled). Fortune
magazinereports (Grainger, 2003) that, on the University of Michigan’s AmericanCustomer Satisfaction Index, McDonald’s has ranked at the bottom of thefast food industry since 1994 and that it sits in 2002 below all airlines andalso the Internal Revenue Service. The only source of growth has beennew outlets. There has been a downward spiral of lack of innovation,disappointed franchisees and disengaged employees, customercomplaints, reduced revenues and poorer shareholders – the company lost$20 billion in market capitalization in 2002. McDonald’s has now realized,perhaps belatedly, that the customer is the real source of value.
Equally, companies can also forget their broader societal role. Research
by Tom Brown and Peter Dacin, who conducted three studies into thenature of corporate associations, found that ‘all three studies demonstratethat negative CSR [corporate social responsibility] associations can have adetrimental effect on overall product evaluations, whereas positive CSRassociations can enhance the product evaluations’ (Brown and Dacin,1997). Similarly research commissioned by BT and The Future Foundation(1998) into ‘The Responsible Organization’ concluded that ‘our researchamong consumers confirms the positive impact good corporate citizenshiphas on corporate reputation and consumer trust’. This is something thatShell realized to its cost over its Brent Spar platform. This North Sea oilplatform had reached the end of its useful life and the company decided tosink it. This may or may not have been the best environmental decision,but the dangers of pollution were seized upon by Greenpeace, whichcampaigned vociferously against the idea. As a result of their actions, Shell,which historically had been seen as a good corporate citizen, found that itsstatus as a socially responsible organization among consumers declined by10 percentage points.
As Simon Anholt has pointed out in his book Brand New Justice
, the other
key driver towards self-correction is the need for big companies to findnew buyers. Many businesses have begun to recognize that the pool ofcustomers in established markets is limited. This has led to a stagnation ofdemand and the search for new geographical opportunities. Although this
can lead to companies seeing developing countries as just another salesoutlet and an opportunity for margin enhancement, a more enlightenedview is that a market that only consists of perhaps a third of the world’spopulation is not truly global. This is driving brands to focus onsustainable development, not as an act of altruism, but because their long-term growth depends on these new consumers: ‘they [big companies]need consumers who are wealthy enough to buy their products, haveenough free time to enjoy them, are educated enough to consume adver-tising messages and evaluate products and brands, and live in countrieswhere there is the liberty to make money and spend it’ (Anholt, 2003: 160).
As an example of this approach, Anholt cites Hewlett-Packard’s e-inclusionprogramme, which works with companies, NGOs (non-governmentalorganizations) and governments to improve the facilities, health,education and infrastructure in developing markets.
One interesting long-term effect of the Brent Spar case was to changeShell’s perception of its role in the world. Shell has embraced the idea ofsustainability, and its ex-Chairman Mark Moody-Stuart has headedBusiness Action for Sustainable Development (BASD). One of the keychanges has been that some NGOs have moved from a stance of hostilitytowards business to working with business organizations to encouragechange. The power of NGOs has also grown inexorably. For example, inthe UK, 48 per cent of the population has worked formally for a voluntaryorganization in the last year and 74 per cent either formally or informally.
Internationally the number of NGOs has grown from 6,000 in 1990 to40,000 in 2002, and membership of such high-profile NGOs as the WorldWide Fund for Nature (World Wildlife Fund in the United States)increased from 570,000 in 1985 to 5,000,000 in 2002. As The Economist
(1999)says, ‘Over the past decade, NGOs and their memberships have grownhugely… Democratisation and technological progress have revolu-tionised the way citizens can unite to express their disquiet.’ This pressureimpacts on different audiences in different ways. Shareholders want tosee good corporate behaviour because of the risks to the business ofunethical behaviour. Governments, under pressure from their electorates,want business organizations to fill the void they have left by retreating
from public areas. And employees prefer to work for organizations thatare seen to act positively. This is not simply to suggest that businessesshould set up corporate social responsibility departments. Rather CSRand the idea of sustainable business need to be incorporated into theiroperations.
An example of this is the Dutch bank, ABN AMRO, which in consul-
tation with NGOs is redefining existing and developing new policies onlending. It has started a programme of micro-loans to small businesses indeveloping countries, which provides small loans to individuals and smallcompanies that do not have good access to the banking market. In the caseof project finance for mining businesses and for forestry, the companyadheres to principles that insist the projects it funds take account of envi-ronmental and social issues. This also has value to the bank’s clientsbecause they are facing similar sustainability issues. It is equally true thatmany clients are working with the same NGOs. As Paul Mudde, SVP incharge of sustainable development at the bank, says, ‘sustainability is notcharity. The essence of sustainability is to integrate economic, social andenvironmental criteria in the key business processes of the organization. Itis based on a triple bottom-line concept of three Ps, which stand for people,planet and profit.’ The power of a bank such as ABN AMRO and equallymajor brand manufacturers and retailers is that by sticking to their ownprinciples of good behaviour they can define the standards that suppliersshould adhere to. At the same time a level playing field with competitors isimportant. This is one of the considerations when ABN AMRO activelyseeks cooperation with other institutions on sustainability. All these initia-tives spread the principles of good governance and sustainability inex-orably into all corners of the business world. When, for example, theSwedish retailer H&M insists on acceptance of unions in suppliers’ busi-nesses and their freedom to strike, on clear standards of child labour andsensible standards of health and safety, it not only has a direct impact onover 900 companies in Europe and Asia, it also sets a standard for retailersand suppliers to follow.
The role of the brand here is as a catalyst for changing attitudes and in
the case of some people as a spur to action. For example, the Nobel PeacePrize, the leading peace prize brand (there are roughly 300 in the world),has a power that goes beyond the monetary awards it makes. Its value liesin its courage and independence. The Nobel Committee makes its some-times contentious awards to people and organizations that it believes have
furthered the cause of peace. Although it has never formally defined thisterm it is clearly on the side of human rights, arms control, disarmamentand humanitarianism. As Geir Lundestad, the Secretary to the NorwegianNobel Committee, says, ‘The prize has many different functions. It’s aloudspeaker for lesser-known laureates. It’s a protective mechanism. Andsometimes the prize can influence a political situation, such as it did in1996 when we rewarded Bishop Belo and Jose Ramos-Horta for theirstruggle for East Timor’s right of self-determination.’5 Lundestad believesthat people’s expectations of the prize are greater than it can deliver.
However, the positive impact of this is that it gives people hope andreminds them of the possibility of the peaceful resolution to problems. Ithelps to get peace issues on the agenda as it did by awarding the prize toAung San Suu Kyi in 1991, which led to the UN condemning Burma’smilitary regime. And it acts as an incentive for laureates to achieve more –as was clearly the case with the 2002 laureate, Jimmy Carter. It is the prizeas a brand that gives it this transformational quality. It confers moralauthority on its winners. If the prize did not enjoy widespread recognition,a reputation for integrity and impact on the emotional needs of people, itwould not have this capacity.
‘What is the meaning of democracy, freedom, human dignity, standard ofliving, self realization, fulfillment? Is it a matter of goods, or of people? Ofcourse it is a matter of people’ (Schumacher, 1974).
In interactions between people and organizations there has to be a
congruency between what is offered and what is delivered. This is thebasis of trust. This idea of trust has to be driven by a relatively high degreeof transparency. This enables the customer and other audiences to havefaith in the delivery of brands. This of course is not an unquestioning rela-tionship. Consumers will still demand certain standards of behaviour fromcompanies and they will ask questions of brands that are seen to fall shortof expected standards. As Amartya Sen (2000: 40) notes, ‘Transparencyguarantees (including the right to disclosure) can thus be an importantcategory of instrumental freedom. These guarantees have a clear instru-mental role in preventing corruption, financial irresponsibility andunderhand dealings.’
The difficulty as previously noted is that pressures on businesspeople
often discourage transparency. There is a tendency to ignore theunpalatable and hide the injurious. A pilot study by the One World Trust(Kovach, Neligan and Burall, 2003) into the behaviour of intergovern-mental organizations (IGOs), transnational corporations (TNCs) and inter-national NGOs suggests that it is not only business that fails in this regard.
All of these types of organizations fail to provide participation andaccountability to stakeholders. Although there is the opportunity tolegislate to encourage transparency, it is more valuable to encourage avoluntary openness. Within organizations the biggest driver for greaterparticipation and openness should be that it benefits effectiveness.
Research by the communications group at Erasmus University inRotterdam demonstrates that employee communication is a vitalcomponent in organizational identification. This posits that there are threefactors in employee communication in terms of their impact on identifi-cation: the perceived quality of organizational messages; the perceivedquality of the communication channels; the quality of the communicationclimate. However, of these communication climate appears to be the mostimportant. Cees van Riel (1999) suggests that ‘how an organisationcommunicates is more important than what is communicated. Thisstresses the importance of “soft” aspects in communication like openness,honesty and participation in decision making, resulting in the necessity formanagers to pay serious attention to communication climate, specificallytheir own role in improving the climate.’
However, the reality of transparency in organizations is somewhat
different. The most common situation is one of distrust. Research consis-tently shows that people do not feel that they fulfil their potential at workand that internal politics prevents effective communication. The employeemay have the desire and the potential to become an active participant inthe organization, but there are clear barriers to engagement. Manville andOber (2003) write, ‘the entire shape of the modern company reflects afundamental distrust of its members’.
In their interactions with external audiences, companies also benefit
from full disclosure. This recognizes the interdependency argument. Adecision made in the interests of one audience such as shareholders orcustomers will have an impact on all other key audiences. Yet the balka-nization of many organizations prevents these linkages being made.
Consequently measurement systems tend to monitor parts of interactions
rather than the whole. When the impacts on customers, employees,shareholders and other audiences are linked together it tends toencourage behaviour that is designed to deliver benefits for all. In thisinstance brands do not become narrowly focused and problems like Nikefaced over its labour policies can be averted. However, changing thisthinking is not easy. While we can argue that organizations should see thefull range of their responsibilities – which is much easier if the focus isexternal – it is far harder in practice. One of the challenges faced by LouGerstner in taking over IBM was its inward-lookingness – a focus oninternal politics rather than customers. Reflecting the environment thatexists in many businesses, Daniel Ellsberg (2002: 53) in writing about histime as an adviser to the Lyndon Johnson government noted theprevailing philosophy as ‘do what’s good for your boss, the man whohired you; put that above what you think is best for the country, abovegiving the president or the secretary of defense your best advice if thatwould embarrass your boss’. Making the customer the focus of the organ-ization and bringing the customer experience inside the business is one ofthe best antidotes against a narrow focus and myopic thinking. It alsostimulates transparency, because if the customer is a partner rather thanan audience there is less to hide.
‘Guidelines, rules and policies do not in themselves make us honest. Theyonly mark the pathway we should follow’ (Kraemer, 2002).
In the wake of corporate misdemeanours, especially in the United
States, there has been a clamour for new legislation. The value of thiswould be to encourage a greater degree of transparency and to stimulateincreased and better-informed choice. Shareholder influence on goodbrand behaviour is perhaps somewhat muted. One of the difficulties hereis that shareholders do not always have sufficient knowledge to exertpressure. Partly this is a failure on the part of the shareholder to seek outthe information, but the larger blame lies with the organization and itsfailure fully to disclose its activities. Legislation should, as the philosopherKarl Popper (2002: 134–39) argued for democratic institutions, prepare forthe worst and hope for the best. Hoping for the best, however, requires usto be active participants. We should not disassociate ourselves as outsiders
from the system and from corporations. As Marx pointed out, our respon-sibility extends to the system and for the institutions within it. Asconsumers, employees and shareholders we can bemoan the failings ofbusiness organizations yet we are still willing participants. If we are to becampaigners for change we have to use our power individually and collec-tively to encourage it. As Popper also wrote about institutions – theycannot improve themselves; the problem is one to be solved by people.
This again hints at the importance of democracy and freedom. As busi-nesses grow in power,6 so does their accountability. They acquire largerroles that put them at the centre of our social worlds. They can use thispower for good by promoting essential freedoms, such as Reebok insti-tuting employee democracy in its factories in China, or for control, such asMicrosoft campaigning against freedom of choice for schools in devel-oping markets.7
Popper in his book The Open Society and its Enemies
argued that the twoprevailing theories of the world could be defined in terms of open andclosed societies. Closed societies are represented by totalitarian systemsand espouse the idea that institutions are everything and the individualnothing. In contrast the open society puts the individual at its centre. Itpraises intellectual honesty and truth. It also lays down alongside thecreed of freedom the point of responsibility: that we must all work toimprove the world in which we live. The focus here is to argue for openorganizations that encourage a similar freedom for people to choose. To doso businesses have to be transparent and willing to engage in a widerworld than the narrow focus of shareholder returns. And they have toenable people to make free and informed choices about the brands thathelp them define their individuality. If brands opt for the closed worldthey do not have a long-term future.
Anholt, Simon (2003) Brand New Justice: The upside of global branding
Brown, TJ and Dacin, PA (1997) The company and the product: corporate associa-
tions and consumer product responses, Journal of Marketing
(1), pp 68–84
(1999) Citizens groups: the nongovernmental order, 11 DecemberElliot, LA and Schroth, RJ (2002) How Companies Lie: Why Enron is just the tip of the
Ellsberg, Daniel (2002) Secrets: A memoir of Vietnam and the Pentagon papers
Gerstner, Louis V (2002) Who Says Elephants Can’t Dance?
, Harper Business, New
Grainger, David (2003) Can McDonald’s cook again? The great American icon ain’t
what it used to be, Fortune
, 30 March
Hammonds, Keith (2002) Harry Kraemer ’s moment of truth, Fast Company
Koerner, Brendan (2002) First you market the disease… then you push the pills to
Koestenbaum, Peter and Block, Peter (2001) Freedom and Accountability at Work
Kovach, H, Neligan, C and Burall, S (2003) Power without Accountability? The global
accountability report 2003
, One World Trust
Kraemer Jr, Harry (2002) Values-based leadership is not an oxymoron in corporate
America, Speech to Chicago Executives Club by the Chairman and CEO, BaxterInternational, 15 October
Manville, Brook and Ober, Josiah (2003) Beyond empowerment: building a
company of citizens, Harvard Business Review
(1), January, p 51
Popper, Karl (2002) The Open Society and its Enemies
, Routledge, London; first
Riel, Cees van (1999) Ten Years of Research, 1988–1998 of the Corporate Communication
Centre, Erasmus University Rotterdam
, Special issue on communication researchin Belgium and the Netherlands, 27 January
Schumacher, Ernst (1974) Small is Beautiful: A study of economics as if people mattered
Sen, Amartya (2000) Development as Freedom
, Anchor Books, New York
As Tim Kitchin argues in Chapter 5, a brand is owned by all stakeholdersnot just by customers.
As Alan Mitchell notes in Chapter 3, the very idea of loyalty to an organi-zation is absurd.
There are an estimated 60,000 transnational corporations and, of the 100largest economies in the world, 51 are corporates.
In Peru, Microsoft tried to enlist the US Ambassador in Lima to undermineunfavourable legislation that proposed open source software in schoolsand also contributed money to the Peruvian school system. And whileChief Executive Steve Ballmer stated in March 2002 that Microsoft wantsto be a responsible leader, he was also copied in on an e-mail, according tothe International Herald Tribune
, from the then head of worldwide sales thatexplained that, if a government or educational deal looked doomed,discounts should be used to win the business (in possible contravention ofEU law). It said, ‘Under NO circumstances lose against Linux.’ (Quoted inFinancial Times
, 16 May 2003, p 19.)
YOU AND YOUR CHOLESTEROL There is quite a bit of talk about cholesterol these days. You may have seen recent news articles about this issue. In the early 1990s, the American Heart Association, in conjunction with the National Institute of Heath, provided guidelines called the National Cholesterol Education Program II, also known as NCEP II. In 2003, the American Heart Association provided
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