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. 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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 common purpose rather than direct control.