A year ago, Burberry faced a conflagration. Politicians and consumers alike were outraged over the label's admission that they had burned $37 million of unsold stock to protect the value of their brand. The savagery of the response was such that a month later they announced they were dropping the practice, and since then Burberry has gone further, pledging last week to eliminate all plastic packing by 2025, along with other commitments, to eliminate real fur and become carbon neutral.
A year on, this episode looks all too familiar: yet another brand shamed by consumer uproar into doing better, with Burberry joining Zara, Chanel, and H&M for its turn in the environmental barrel. But a closer look reveals something more interesting. The moment is meaningful not because it reveals Burberry was cavalier about converting couture into CO2-- but because it showcases the danger of thinking of a brand as a financial asset, whose value must thus be protected by controlling supply.
This asset-based mindset goes back a long way, and it's now the dominant model for how we think about brands. Back in 1988, to protect itself from hostile takeover, UK food company Rank Hovis McDougall hired Interbrand to calculate the value of its brands and recorded them as intangible assets on its balance sheet. The move met with all kinds of regulatory scrutiny, but has since become common practice, and has spawned a lucrative industry. Brand valuation is now on every MBA syllabus, it's embedded into accounting practices, it's enshrined as an ISO standard (number 10668 if you have serious time on your hands) and it grabs headlines every year through public horse races such as the Best Global Brands list from, of course, Interbrand.
The "brand as asset" mental model is so pervasive that we don't stop to question whether it's helpful. In other words, it may work well for takeover protection, but is it the right mindset to use when you are managing a brand? My argument is that seeing your brand this way is actively unhelpful, especially into today's technological and cultural context, because it presents three big problems.
Seeing your brand as a financial asset puts you in a defensive posture.
Assets need to be protected. They need security. They require risk-averse management. As a result many brand teams get caught in a criminal justice mentality, policing guideline violations internally and trademark infringements externally. This is not only a huge time-sink, but can lead to embarrassing overreaches, such as Facebook's suing a teachers' community website called 'Teachbook' and Starbucks taking a bar owner to court over a beer he named Star Bock.
Our culture is especially suspicious of corporate bullying these days, and we also value brands that allow more flexible co-creation-- a trend started by Google's work with illustrators on the Google Doodle, and notable today in Supreme's open-minded approach to design partnerships. Ask yourself less who might be misusing your brand, and more who should be co-creating its future with you.
If you see a brand as a pile of money, you are likely to think that more money is needed for it to succeed.
And while brand building can be expensive, it's driven less and less by the inflated ad budgets and tentpole campaigns of the past. Nike has spent more on its digital platforms than on its advertising for years now. A recent study by my firm revealed that the most successful brands today invest around two-thirds less in paid media than slower-growth competitors, because they are driving growth through actions and innovations that generate their own exposure in the form of press and influencer commentary. Ask yourself what actions and innovations you might redirect expensive media money towards and you will be thinking like these high-performing companies.
The asset-based mental model pictures the brand as a noun-- and a monolithic one at that.
The reality is that brands are verbs: they live in the moments of action and interaction between your business and the world around it, and great ones generously invite people in to contribute. Platform brands like Airbnb are constantly seeking to add human encounters and interactions to the experience-- most recently through Experiences.
Curation brands like Glossier are built bottom-up from the taste and engagement of participants. And activist brands like the ACLU live and breathe through community engagement: realizing this, when we helped them redefine their brand for the Trump era, we did so in the form of an open toolkit of brand elements that local chapters could co-opt in whatever ways they needed, rather than a logo and a fixed set of usage guidelines. Ask yourself how your brand could create moments that compel people to contribute rather than persuading them to purchase.
This new mental model, of brand as action rather than asset, verb rather than noun, promotes innovation and agility. It engages today's customers on their terms, it creates communities of participation around you, and along the way it just might generate that big pile of money you had to make yourself stop thinking about.