...many start-ups, technology-driven companies, and others in business-to-business and non-consumer markets fail to recognize that (the) Brand phenomenon applies to all organizations.

The Brand has risen to occupy a place of paramount importance on the pages of such stalwart business publications as Financial World, Business Week, and Fortune magazine. In the 90’s, when these reputable magazines first started reporting financial valuations for brands, much to everyone’s surprise, these valuations were often greatly in excess of the annual revenues of the companies surveyed. As the reality and significance of these numbers sunk into the corporate world, the concept of “the Brand” quickly rose to a new level of strategic significance.

Still many start-ups, technology driven companies, and others in business-to-business and non-consumer markets fail to recognize that this Brand phenomenon applies to all organizations. These individuals have been accustomed to thinking of brands as a “marketing concern,” or as only of interest to those who provide consumer goods or services. However, the Brand, in virtue of its significant financial value, and enormous potential to drive economic markets, has become a major strategic factor in the corporate world providing competitive advantage, delivering shareholder value, creating wealth, and ensuring social prosperity.

The Emergence of the Brand
Fifteen years ago “the Brand” wasn’t even on the radar screen for senior corporate executives. At best, “the brand,” was limited to the marketing department of consumer packaged goods enterprises as a tool of marketing.

Suddenly every industry and every undertaking was learning the Brand business model.

But then, during the early 1990s, a new corporate strategy, “growth through acquisitions,” emerged and initiated a now famous wave of merger and acquisition activity that has lasted until our present day. However, as visionary corporate executives began to acquire companies, they encountered an unforeseen obstacle in setting the value of their acquisition targets. In days past, book value and some multiple of revenues had been adequate to strike an acquisition deal. But suddenly, attractive companies, with enhanced market capitalizations, weren’t to be had at book value driven prices because of their “intangible assets.” As accommodations were reached and increasingly pricey deals were struck, a whole new concept emerged that has since found its way into the top ranks of corporate management. It was the concept of “intellectual capital,” and it came to refer to a range of intangible intellectual assets, but most primarily, as so many of these early and astounding deals revolved around famous brands, to “the Brand.”

As we look back today, we can see that the beginning of the decade of the 1990s was the beginning of a tremendous increase in economic activity worldwide. Mergers, acquisitions, new financial vehicles, and complex business arrangements emerged to radically change the economic landscape and companies of every shape and size for the better. During this time, mergers and acquisitions were revealing that what made a company attractive to an acquirer often wasn’t captured on its balance sheet, be it a famous brand or patented technology or the promise of a totally revolutionary business concept.

The Theory of the Brand The strategic thinking surrounding brands advanced by leaps and bounds during the 1990s to become the province of the most successful executives and strategic thinkers. Spurred by the emerging theory of intellectual capital assets, the Brand was soon recognized as the ultimate intellectual capital asset, the raison d’etre for all other forms of intellectual capital, and as an end-in-itself for any and every successful enterprise, undertaking, or corporate entity. The diagram below articulates this supremacy of the brand and its relationship to other the elements of intellectual capital, demonstrating how means-to-ends roll up and distill their value into the brand as the ultimate intellectual capital asset. This model portrays the general categories of intellectual capital assets, such as ideas and innovation, intellectual property, corporate culture, and human resources such as talent and expertise. These intangible assets culminate in knowledge-based products and services that create goodwill and form the structure of what the Brand means to its constituency and its surrounding world. In and of themselves, these prior intangible assets lack the orchestration and integration that they receive when they are organized with meaning and significance under the identity of a brand in the marketplace. The Brand distills and assembles and incarnates all of the other intangible intellectual capital assets in an enterprise into the meaning of a Brand in the minds of customers, consumers, and the society at large.

As “growth through acquisitions” gained momentum, the paradigm shift that led from valuing and managing traditional physical assets to valuing and managing intangible and intellectual capital assets came to pass. And with it, emerged the shift toward the strategic management of intellectual capital assets that has changed the priorities of corporate planning forever.

The Rise of Strategic Brand Management
As Brands emerged as a bundle of profoundly important intellectual assets, the Brand and Brand Strategy grew rapidly throughout the 1990s, increasing in importance, and often becoming the corporate strategy itself.

Soon, the marketplace became flooded with new brands, trademarks, slogans, and the understanding of the value of brands and branding began to spread beyond consumer goods into industries that didn’t even sell to consumers. Intel Corporation, with its “Intel Inside” brand strategy began to teach technology players how to increase gross margins with a product line brand. Pharmaceutical giants adopted product branding architectures from food and beverage companies to turn drugs like fluoxetine hydrochloride into Prozac, and then to go on to drive sales to record-breaking levels with demand created by direct-to-consumer advertising and imaginative line extensions.

However, despite the spread of brands into non-consumer industries, many enterprises still viewed the corporate brand as a mere trade name. But soon they too began to recognize that well-branded enterprises found it easier to command respect and set policy with governments, influence and establish industry-wide standards, find partners for strategic alliances, obtain new sources of capital, and that it was less expensive to expand globally when the corporation itself was well-recognized and regarded.

In time, Brands began to penetrate beyond the corporate world. Suddenly governments, nonprofit organizations, and civic entities began to realize that they needed a Brand to allow them to compete more effectively in their strategic arenas, whether to deter terrorism, attract tourism, or obtain grant money. Suddenly every industry and every undertaking was learning the Brand business model.

The Importance of Brands
Executive leadership within every organization should recognize that Brands are more than just the name of the company, a trademark for a product, or a service mark for a service. The Brand is a complex concept that creates organizational value and performs a number of important functions for every enterprise. Brands and their combined Brand Equity constitute the major economic force within the entire global economy, delivering marketplace value, shareholder wealth, livelihood, prosperity, and culture.

There are hundreds of thousands of brands within this world, but only a few hundred Brands that move markets and are highly valued. Today, successful Brands are recognized as rare and valuable assets that must be exploited carefully, with wise and knowledgeable management that retains their financial value, their economic power, and their social significance.

Brands have become the most valuable asset within any enterprise, quintessentializing the knowledge, the art, the science, and the work of each person in each work day, making them the ultimate symbol of much that is good and true and beautiful within our global economy.

A revised version of this article was published during April of 2004 by Globe White Page Ltd., London, England, as the introductory chapter to their new book, Brands in the Boardroom: Key Branding Issues for Senior Executives. Copyright 2004, Dr. Lindsay Moore and Mrs. Lesley Craig, Esq. All rights reserved.