While earning an MBA at Boston University’s Graduate School of Management, I wrote a thesis for my advanced-finance course on the value of conglomerates — huge firms, like ITT, composed of unlike businesses. My quantitative analysis proved that such mashups did not benefit shareholders, who could achieve better returns by creating their own diversified portfolios.
In addition to being a subpar investment vehicle, a conglomerate is a branding nightmare. What is it? What is its core value proposition — to whom?
Hard to Put a Single Label On It
Look at the Fortune 500 of 2008. Huge companies. Behemoths all, from Walmart at $379B in annual revenues to Scana at $4.6B. Most of them grew to their current sizes by subsuming other companies. Growth, whether organic or via acquisition, serves one of two competitive goals: deliver more value to existing customers or serve new ones.
Regardless of expansion goal or method, the strategy must be sound and the new brand easy to articulate. Yes, the new, updated brand. Once the composition of a company changes, its identity changes. That means new brand, too. Why? Brand is identity. Instead, what I usually hear from execs is this: “We’re in so many lines of business now, it’s hard to put a single label on it.”
Really? That’s your job. When I hear that excuse, I deduce that this behemoth has become a conglomerate. Talk about lacking uniqueness and being stuck in the white noise!
As I’ve repeated ad nauseam, if one cannot articulate his brand in customer language (never vendor language) — uniquely, concisely, compellingly, memorably — there is no brand.
Rx from The WhiteNoise Doctor™
Branding a behemoth, like a startup, is a critical responsibility of every CEO. There’s no getting around it. Size and complexity are not excuses for a weak brand.
If your behemoth struggles to convey a unique core brand, there are three possible reasons:
- It became a behemoth for growth’s sake, via wild acquisition binges, not to enhance the brand
- The wrong people are assigned to branding the behemoth
- As an inexplicable conglomerate, your behemoth is simply unbrandable.
Customers — consumer, industrial, military, or commercial — buy from vendors whose brands they understand. Do they understand your brand? Test it. Ask your biggest customer to explain it to you.
BEHEMOTH POSTSCRIPT
On July 22, 2009, Amazon.com announced the $850M acquisition of Zappos, an online shoe retailer whose brand I analyzed previously. When questioned about it, Amazon CFO Tom Szkutak said: “This deal was not about synergies. This is about growing in categories that we think are interesting.”
Interesting? Mr. Szkutak: Invest your money — not the stockholders’ — in categories you think are “interesting.” This is the recipe for building a behemoth!
© 2009 Marc H. Rudov. All Rights Reserved.
About the Author
Marc Rudov is a branding advisor to CEOs,
producer of MarcRudovTV, and author of four books