Corporate Branding, Organisational Culture and Market Adaptation

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Corporate Branding, Organisational Culture and Market Adaptation:
“Close doesn’t always count in winning games”
Richard Jones
Department of Marketing, Copenhagen Business School, Denmark
E-mail: [email protected]
Refereed Paper
Corporate Branding, Organisational Culture and Market Adaptation:
“Close doesn’t always count in winning games”
ABSTRACT:
This paper looks at concept of corporate branding from the perspective of adaptability. Whilst
corporate branding has been presented as the rejuvenation of branding at a time when belief in
traditional product branding and advertising is failing its underlying assumptions about the usefulness
of corporate culture and values as marketing tools are not fully considered in the current literature.
This paper applies systems and organisational theories in relation to organisational sustainability to
draw conclusions about the conditions under which corporate branding is a relevant concept and those
conditions where it is not. Management recommendations are included.
Keywords: Corporate Branding, Requisite Variety, Market Adaptation
CORPORATE BRANDING, ORGANISATIONAL CULTURE AND MARKET
ADAPTATION: “CLOSE DOESN’T ALWAYS COUNT IN WINNING GAMES”1
In the intensely competitive environment of US baseball, team coherence and ultimately team culture
are often cited as being the key to success. Baseball is, after all, a team sport that requires that the
whole team pull together to act as a unity to challenges both on and off the field. There is little room
for the self-promoting individual, who are often expelled from clubs. So traditional thought says that
closely-knit teams win whilst those that aren’t close don’t win. However, evidence seems to suggest
that this is not always the case. Particularly in situations of high stress and low predictability the
functionality of the team may be aided where group ties are more diffuse. The Yankees have recently
been plagued by a number of media stories about their team member’s actions on and off the field:
steroid abuse, violent and profane behaviour by players and mangers, and scuffles with the media
(NYT, 2005). In such a situation one might expect these incidents to quickly develop into a crisis for
the whole organisation: Incidents that might impact on its organisational identity and image and also
impacting on its image externally and ultimately affecting organisational performance (Dutton &
Dukerich, 1991; Wilkins & Ouchi, 1983). This turbulence has however not been transferred to the
team’s performance nor to their ability to act as a team. Whilst it appears that whilst the Red Sox
have excelled on the field (they are the current “World” Champions), the Yankees have been
exceptionally resistant to turbulence off the field. Why this sudden interest in baseball from an
Englishman who would rather talk about cricket? This example is directly relevant to the current
interest in using corporate culture as a marketing tool to differentiate the organisation to customers,
competitors, employees, the media and other stakeholders (Schultz & Hatch, 2001, 2004; Hatch &
Schultz, 1997; Balmer, 2000; Ind, 1997). The case is perhaps indicative of a little-explored paradox in
relation to the use of organisational culture as a marketing tool: that whilst the, in the literature,
espoused characteristics of cohesiveness and consistency are desirable from a communication
1
New York Times, March 7, 2005
perspective, they may actually impede organisational survival by entrenching the organisation in its
own culture.
The insights provided from this simple example are relevant for managers for two reasons: firstly, that
whilst cohesive cultures, such as that of the Red Sox’, are effective (Denison, 1990) in relatively stable
and predictable environments where managers can focus on refining strategy (Christensen, 1997), they
may be less effective in turbulent environments (Chakravarthy, 1997) where organisations are forced
to (re)act to rapidly changing circumstances. Thus, the Yankees’ resilience to onslaught off the field
may actually provide useful insights into the characteristics of resilient organisations and the current
focus on corporate branding. Secondly, that the success of the team is dependent not only on direct
competitive relations but also on its relations within the context of multiple stakeholders, who have
different interests in the organisation.
Pulling from systems theory from the biological sciences, this article assesses the consequences of
uniformity on the long-term prospects for the brand and its consequences for communication. The
paper distinguishes between strong and weak corporate branding. It is suggested that strong corporate
branding should be used with caution since it may reduce the ability of the firm to adapt and thus to
innovate.
The questions addressed in this paper are:
1. How does corporate branding contribute to organisational learning?
2. Does corporate branding lead to less diversity in the organisation?
3. To what extent is it advantageous for the organisation to have internal homogeneity?
4. How does homogeneity affect the organisation’s ability to react to changes within and outside
the organisation?
CORPORATE BRANDING AS A RESPONSE TO ENVIRONMENTAL
UNCERTAINTY
Corporate branding has been promoted as a tool to meet the multiple challenges of the firm today: the
need for increased differentiation in increasingly commoditised markets, the need to attract and retain
highly qualified staff to sustain the value generating processes of the firm, the need to address the
expectations of an increasing number of stakeholders in order to maintain corporate legitimacy and,
not least the need to present a credible, substantial and sustainable corporate image to competitors and
investors in order to ensure corporate survival.
The uncertainty in the firm’s environment is also increasingly matched by internal uncertainties within
the firm. As pressure grows, particularly on service firms, to improve the utilisation of human
resources firms are increasingly looking at ways in which to brand the firm internally and to
prospective employees. In this corporate branding battle it is the firm’s culture and values that appear
to take the central position. As a number of commentators have argued, corporate branding is about
more than creating a unified visual identity (Olins, 2000), it is about creating a common sense of
direction for the whole organisation (Schultz & de Chernatony, 2002). This is achieved through such
tools as corporate storytelling (van Riel, 2000) and value-based leadership (Pruzan, 1998). The
overarching aim of these efforts is to reduce internal and external dissonance by identifying strategic
gaps in the organisation’s corporate branding communication (Hatch et al., 2001; Balmer & Greyser,
2002).
The role of integrated communication is central to reducing these gaps and achieving coherency in
organisational communication. Firms are advised to communicate with one voice to all their
stakeholders by coordinating their “total communication” (Balmer & Gray, 1999). ”It seems evident
that raising a corporate umbrella over all communication activities is the face of the future” (Kitchen,
1999). This is usually achieved through extensive internal work on identifying key difference between
values held by staff and management, workshops designed at eliciting an emerging common culture
(de Chernatony, 1999; Schultz & Hatch, 2003). Internal consistency is seen as the key to the
development of organisational success (de Chernatony, 1999), whilst diversity is to be reduced
(Schultz et al., 2002).
To sum up then there are the following core assumptions behind corporate branding:
1. Foundation on corporate values: the corporate brand builds upon identified corporate values.
2. Coherence: that the brand presents a coherent promise to all stakeholders.
3. Minimisation of diversity and gaps: Whilst recognising that staff, managers and the
corporate brand may have different values, the aim of corporate branding is to reduce
these differences (Schultz et al., 2002).
CORPORATE BRAND VALUES AND ORGANISATIONAL VALUES
The subject of values and culture appears to unite corporate brand theory with that of organisational
theory. Traditionally in organisational theory there has been a dominant view, which sees
organisations as having clear and unique cultures, which are deep and stable (Schein, 2001). There has
also been a good deal of focus on the role of culture in organisational performance (Peters &
Waterman, 1982; Deal & Kennedy, 1982; Denison, 1990). The strong theory of culture makes
assumptions about the role of culture in internal knowledge transfer, organisational learning, aligning
individual members goals with organisational goals and more generally in generating a common sense
of purpose about the organisation. Within corporate branding it is the organisation’s culture that is
seen as the basis for the corporate brand promise (de Chernatony, 1999).
However “native views” (Gregory, 1983) of organisational culture suggest that these strong
organisation-wide views of culture cover-up the existence of powerful sub-cultures. Institutional
theory (for example, Hennart, 1994) also tells us that institutional barriers work against the creation on
uniform organisational cultures. Sources of barriers can be: personal (individual resistance to the
brand), departmental, professional and cultural. Further, Wilkins & Ouchi (1983) argue that
organisations built up around semi-autonomous clans are often more efficient that unified
organisations. Evidence of the impact of strong cultures on performance is at best anecdotal and
largest theoretical. Work carried out within the field of values-based leaderships has also underlined
the limitations of the use of values in relation to corporate brands. Morsing & Thyssen (2003) carried
out an extensive survey of the use of values in both public and private organisations and concluded
that: 1. Values are widely used and 2. The same expressed values are used by many organisations.
Thus, the use of values as a way of differentiating the firm appears limited. Further many of these
values can be ascribed to particular industries, so-called category values.
This raises some important questions in relation to corporate brands: 1. Why is it that
corporate brand values become so generic? How can corporate brands overcome the apparent
disparities within organisations? Is the achievement of uniformity within the organisation
always a good thing? To answer these questions we can again useful insights from work on
sustainable systems.
What are the core characteristics of sustainable organisations?
Organisations like any system are continually challenges by change and uncertainty in their
environments. Organisational survival depends on the organisation being able to respond and adapt to
environmental conditions. In such circumstances organisations should be flexible and adaptable.
However organisations also require stability in order to build up effective internal routines and
develop core competencies. Stability and predictability are prerequisites in order to develop such
routines (Weick, 1979). This paradox between stability and flexibility is highlighted in the case of
corporate branding since through corporate branding the organisation focuses on the stable elements of
the brand: organisational values. Some here might point out that many organisations have flexibility
(or adaptability) as one of their core values; this is true but in this sense flexibility is symbolic since it
rarely results in change in the organisation. In a similar vein Lawrence & Lorsch (1967) famously
noted the organisational requirements for both differentiation and integration simultaneously:
Differentiation in order to be able to respond to complex, heterogeneous environments and integration
in order to achieve a unified effort. Once again corporate branding focuses on one half of the
equation: integration. In order to discuss the consequences of this it is worth considering the key
characteristics of sustainable systems.
To identify the characteristics of sustainable systems, consider ecosystems. They are: complex,
dynamic, diverse and adaptable (Holland, 1995). Diversity in systems is widely credited with longterm survival. In line with Lawrence & Lorsch (1967), diversity through differentiation creates an
environment that is more responsive to change and adaptation. Diversity is however not simply about
differentiation. Certain departments within organisations may be subject to large pressures for
standardisation through benchmarking, certification and accreditation whilst others may find that
organisational performance requires the establishment of small autonomous teams. Overall
organisational survival depends on establishing structures and routines that are suited fostering
organisational innovation and adaptability, which requires flexible structures (e.g. Burns & Stalker,
1961).
”Orderliness is overestimated and erroneously given credit for adaptive success. Having been
credited, orderly actions are implemented again in the future, perhaps tightened even more, and
suddenly the organisations finds itself out of touch with changes that are occurring and finds
itself saddled with an antiquated, tight structure” (Weick, 1979: 186).
The implication of this for the organisation can be summed up by the following quote: “When large
corporations are too centralised, senior leadership may impose an obsolete formula for authorising and
developing innovations. Such an atmosphere may stifle the vision of new markets and the pursuit of
relentless innovation that are critical to success” (Tellis & Golder, 1996: 73)
Organisational theorists have for many years suggested that organisations have strong tendencies to be
self supporting and introverted. Child (1972) suggests that organisations are loosely coupled to their
environments in that they are selectively attentive to changes in their environment. Weick (1979) goes
further to argue that organisations enact many parts of their environment through this selective
attention process. He suggests that through the impact of: structures, schema, selectivivity of inputs
and selective retention, managers and organisations effectively construct their environments and
further, that they continually strive to maintain these constructed environments throu gh these
mechanisms. This process is both a result of the structures and rituals of the organisation as well as
the actions of the environment to the organisation (Starbuck, 1976).
Weick suggests that organisations have a strong tendency to two types of selection criteria: criteria
relevant for internal functioning and criteria relevant for external functioning. Further, he notes,
"Even more crucial is the fact that actions which satisfy internal selectors may provide the illusion that
all is going well when in fact virtually no attention has been paid to the changing environment and the
placid group is in danger of bankruptcy" (Weick, 1979:179).
Consider the example of Apple Computers. Building on a unique technology in the form of its
operating system based around the “mouse” and its windows user interface, Apple attempted to
challenge the big players at the time. Together with the introduction of their Macintosh computer in
1984, the company launched its “Think Different” campaign. There is no doubt that in marketing
communication terms the launch and the campaign were second to none. However, history (or the fate
of the market) was more interested price, peripherals and availability. As proprietary brand of Apple
failed and slumped during the course of the 1990’s from a 11% market share to just 3% it was clear
that Apple’s identity as the alternative (originally alternative to IBM, but increasingly alternative to
Microsoft) did not create enough value for its potential customers. Indeed, we can clearly see that
Apple was so focused on its own identity as the alternative and as an innovative thinker within the
market that it effectively isolated itself from the market. As Weick suggests, Apple blinded itself in its
own picture of success. Structurally, it defined its market increasingly as education and media, where
it maintained a strong presence. However its own belief in its core identity became its downfall.
Being different was a poor value proposition where is value was outweighed by the consequences for
lack of compatibility in a “Windows World.”
This may be called corporate blindness when the organisation, loosely coupled from its environment
becomes overly focused on internal performance factors. In the case of Apple this proved almost fatal.
Interestingly Apple has moved away from the corporate brand and its own belief in the immortality of
its brand. The company’s focus is now 2-fold: on compatibility with Microsoft’s Windows or “being
part of the Windows world” as Steve Jobs has said, and focusing on the sub-brand of the “i-“ family:
iTunes, iPod, iLife, iMac.
Of course in certain situations corporate blindness is necessary. In cases of internal chaos, particularly
after mergers, organisations need to cut off the world around in order to focus of their internal identity,
to establish new organisational routines and working practices and to ease knowledge sharing within
the organisation.
Adaptation and Requisite Variety
Given that organisations need to be able to adapt to their environments, the question for management
is therefore what systems are required that can accommodate the need for diversity in the organisation
whilst maintaining adequate integration? Systems theory suggests that adaptation to complex
environments requires that the system mirror the complexity in its environment. In other words, “that
the variety within a system must be at least as great as the environmental variety against which it is
attempting to regulate itself. Put more succinctly, only variety can regulate variety” (Buckley, 1968,
quoted in Weick, 1976). Weick suggests that in order to fulfil this requirement the organisation should
exhibit three properties of: 1. Many elements, 2. Independence of elements, 3. Weak internal
constraint (Weick, 1976: 190). These recommendations follow the thinking outlined above regarding
the prerequisites for flexibility and innovation in organisations. Thus for complex environments the
organisation should attempt to maintain internal processes of competition, promote decentralisation
and autonomy. This places particular challenges on the corporate brand manager and the existing
focus within the literature on corporate values. As Chakravarthy argues: “a firm’s true competitive
advantage for coping with turbulence is not in its current distinctive competencies, but i n those that it
can grow tomorrow” (Chakravarthy, 1997: 82). It is therefore imperative that the corporate brand
does not stifle this internal innovation, nor isolate the firm from its environment. However, it is
equally important that enough internal consistency is created in order to optimise internal efficiencies.
Interestingly, the rise of decentralised organisations and increased cooperation between organisations
fits well with these challenges. The symbolic core of the corporate brand must therefore be just that in
that it should create a vision for the future of the organisation whilst not constraining it to its past.
RECOMMENDATIONS FOR MANAGEMENT
This paper has examined the concept of corporate branding from the perspective of adaptability. It has
seriously questioned the validity of a corporate branding structure that attempts to lock the
organisation around existing corporate values. Corporate branding can however be a powerful tool to
bring the organisation’s various stakeholders together, when used where there is: 1. a stable external
environment that is predictable and analysable (Arndt, 1979) or under quasi-monopoly conditions
(Porter, 1980); 2. internal instability that is leading to the breakdown of internal communication and
knowledge sharing; 3. product intangibility (as in the case of service brands) where there is a need for
a high level of coherency. This leads to the following general consideration when considering
implementation of a corporate brand:
1. Corporate Branding operates most effectively at the strategic, company-wide level: The
strength of corporate branding lies in its ability to reach across the organisation and bring
organisational members together under the umbrella of the corporate brand. At this level the
corporate brand can rejuvenate the company and the brand. It is underlined that corporate
branding has strategic implications for the firm. As discussed above the impact of the
corporate is company wide: it involves all the company’s internal stakeholders and, if it is to
have any meaning attempts to move the whole organisation. Given the enormity of this task
(see discussion on organisational sub-cultures) this task is not to be taken lightly
2. The implementation of Corporate Branding is context dependent: Corporate branding’s
emphasis on integrated communication makes it suitable in stable environmental conditions,
for homogenising internal culture and where there is high degree of product intangibility
3. In conditions of environmental uncertainly and turbulence the organisation should encourage
diversity and complexity within its boundaries: diversity and complexity create the conditions
for requisite variety that enable organisation responsiveness to environmental change (Weick,
1976).
4. The firm should be aware of the balance between cultivating an overall corporate identity and
supporting flexibility: The stronger the focus on organisational culture and corporate brand
promise the less likely the organisation is to retain the flexibility necessary for innovation
(Chakravarthy, 1997).
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Whilst the Red Sox’s cohesiveness as a team has apparently served them well on the field, and in the
relatively predictable sphere of baseball, the Yankees’ resilience to onslaught off the field may
actually provide useful insights into the characteristics of resilient organisations and the current focus
on corporate branding. If we translate this example into the realities faced by managers in turbulent
environments (Chakravarthy, 1997), the Red Sox’ cohesive culture has enabled them to perform well
in the controlled and rigid environment of baseball; turbulence is small and the mangers can focus on
refining strategy. For the Yankees their resilience to turbulence may be attributed to their
decentralised and loosely knit structure; individual’s on the team are expected to deal with their own
problems with stakeholders (primarily the media in this case) and team support is based around a
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