BrandLoop #8, January 1999

The Emperor's New Clothes

There is a simple fairy tale of the Emperor’s New Clothes. For those who may not be familiar with the story, there lived an emperor who was fond of new clothes. Two swindlers came one day and claimed that they were weavers and said that they could weave the finest cloth ever seen. The colours and patterns were not only exceptionally beautiful but the clothes made from this material possessed the wonderful quality of being invisible to anyone who was hopelessly stupid. To cut a long story short, the emperor paraded in the streets wearing the new clothes, which were, of course, non-existent. Only a child spotted that the emperor was actually wearing nothing at all, however, the emperor carried on regardless.

Reinforcement of Brand Value

At the end of the 1990s, the pressures for companies to obtain additional brand value have never been so intense. As a result, the creation of new brand identities continues apace as:

• Companies get rid of the skins of old identities. For example, Lucent Technologies from the restructuring of AT&T, Danone from BSN and Vivendi from Compagnie Générale Des Eaux.

• Where companies merge or form alliances such as Diageo from Grand Metropolitan and Guinness, Novartis from Ciba and Sandoz.

• To establish new concepts such as Iridium (satellite phones), First Direct (telephone banking) and B2 (a new savings account).

In the case of the emperor’s new clothes, brand management needs to be finessed both to internal and external stakeholders. There would seem to be a set of best practices which are just starting to emerge. Through the Loop has been looking at some of these areas to investigate a critical decision path in these circumstances. The emperor’s new clothes strategy should also be contrasted to where the parties have not opted for the brave solution of creating a new name but have preferred to manage the combination of two identities. Examples of this include: Lloyds TSB, PricewaterhouseCoopers, DaimlerChrysler, Degussa-Huls, Vodafone-Airtouch and Royal Sun Alliance. It has to be said that each of these has differences in terms of name recognition, strength of brand equity and management egos involved.

This Loop newsletter looks at specifically at those companies which have adopted a new name and reviews some of the issues involved across several examples. It should not be forgotten that the primary objective has to be the reinforcement of brand value. The magnitude of the brand value issue is well demonstrated in the Financial World league of leading brand values. This shows that the top five world identities are: Coca-Cola, Marlboro, IBM, McDonald’s and Disney. There is no doubt that mismanagement of the branding process results in erratic and uncertain brand value over time. For this reason, the emperor’s new clothes strategy needs to be closely examined for its future impact.

A Logo should be like a Japanese Haïkaï

Sometimes it appears as though a random name generator has been let loose in the process of name creation/ identity creation rather than a sound marketing rationale. Catherine Chaillet, the eclectic designer of the Vivendi identity, summed the objective clearly and succinctly as:

"when considered as a whole, a logo is a kind of visual acrostic. It makes people think and imagine. Something to understand as much as to contemplate. It’s like a Japanese Haïkaï in its conciseness and must express the whole story. It must be pleasing to the eye and the relationship that develops between it and the person looking at it creates a natural bond, a warm feeling. A logo must be clear. It has to be instantly perceived and recalled."

Too few of the current crop of the emperor’s new clothes would seem to match this criterion.

On with the New

A new name/identity allows the luxury of old "baggage" to be discarded from the previous company and permits a step-change or at least evolution/ revolution to be made. This can clearly take into account new corporate activities. Often, strong differentiation is needed from the past although this is not always easy. Lucent Technologies and Vivendi were mentioned before as examples of this kind of transformation.

Lucent Technologies was created as a result of the restructuring of AT&T and needs over time to move away from the use of the AT&T brand name. As an article in Fortune (May 26, 1997) outlined:

"While liberation from AT&T has been a cause of celebration, the process has not been hangover free."

The challenge was to be able to step from the previous heritage of an amazing 125 years into a new company and give it attributes as simply as possible without bragging. Also the budget needed to be used as cost-effectively as possible and therefore a consistent look across the business divisions within Lucent was needed. The name of Lucent means glowing with light or clear and could also be used across cultures without problems. In spite of adopting the new identity, it is interesting that Lucent still uses the endorsement of Bell Laboratories Innovation. This shows the possible balance between the old and the new organisational forms. In fact, Lucent has now become the star of the AT&T restructuring process.

The transition to Vivendi was made to reflect the fact that the company now offered a broad range of services, energy, transport, construction, property, telecommunications and media. The new identity needed to encompass the values shared by the business sectors such as service and accessibility, modernity and anticipation, improvement of daily life and international scope and strength without arrogance. The name is easy to pronounce and can be rapidly recalled. Even in China, there is surprisingly close identification with the group’s culture. The ideograms representing the closest phonetic translation of Vivendi denote: to join or link, ten thousand or numerous and to progress. Vivendi seems to have made the transition to a more dynamic identity which is being communicated with a substantial budget. The brand tracking results will tell in due course.

Merging Two into One

Another form of name transformation occurs post-merger. Here is an interesting interplay of forces merging two previous identities (with all their attendant baggage) into a new streamlined identity. Technically, this should allow not only the introduction of a new vision but also the fusion of two separate cultures. Examples include the creation of Diageo and also Novartis. Novartis was named after the Latin novae artes, meaning new skills. The new identity has been an umbrella for the transformation of both Ciba and Sandoz into one of the leading global pharmaceutical players. It has also led to a renewed focus on the branding process and a stronger focus on the organisational form. As Mr Jeannet said:

"The two companies had different cultures but I think that management was very smart in launching this a as a new company and saying, don’t look back, look into the future, take the opportunity to select the best and improve where we are weak."

The global campaign to communicate Novartis was launched at "enablers." These were key decision-makers in government, the sciences, politics, business and finance.

"If these people know you and are for you, you have a much easier life."

Walter von Wartburg, Novartis.

The additional point was made that it was then irrelevant in the new identity which member of staff had come from which organisation. This indicates how the old cultures have to be transformed into the new. Internal marketing often plays a critical role here as it is just as important as external implementation. Management and employees have to be fully involved in the new identity.

New Concept, New Name

The third kind of identity was required sometimes to launch completely new concepts. This has all the attendant advantages of no previous baggage and a complete cultural separation from other marketing efforts. Iridium, First Direct, Egg and B2 are all examples here. This is the clearest path and should be easier to implement. Indeed, Orange has been astonishing successful here. Indeed, the future is bright with a new name and clear category differentiation.

However, there are those who are wed to their old names because of the inability to let one identity or another go, because of reasons of ego and perhaps there may be a sound business rationale. It has to be said that rarely do these combined names meet the objectives specified earlier of "a logo has to be clear. It has to be instantly perceived and recalled."

Summary

The emperor’s new clothes strategy appears to be an increasing phenomenon which clearly covers a range of marketing implementation issues. These do need to be clearly thought through as identity creation is just the first stage. Sometimes haste is resulting in the brave decision not being taken.

Through the Loop’s observations about moving to a new name/identity include the following:

• There is a considerable advantage in having a name and an identity which means something. Finding these concrete properties should be part of the renaming process. The ambiguity surrounding Diageo has led to some unkind commentators suggesting that the name really means "around the ground."

• The name change should just be part of the transformation and not represent the whole of the transformation. There should be new substantive information about how the new identity will be different and act differently.

• The change can encompass a difference in philosophy.

• The process of implementation justifies as much time as name creation.