Breaking Down Silos to Create Greater Value

Silos exist throughout the organization and they impede the organization in many ways. Organizations were historically set up along the so-called value chain. Each internal group was there to contribute to the overall value of the company. There were support functions --HR, technology, etc.-- and then there were functions that created and sold the products--inbound logistics, R&D, outbound logistics, marketing, sales. The structure of the value chain as it appears in textbooks has virtical bands--silos for each function. They were to do their thing and then hand it off.

Companies do not work this way anymore, at least not the efficient one. It is time to turn the value chain horizontally. Companies should focus on the value they are trying to create externally. They have many stakeholders--customers, employees, investors, and others. Why not ask the internal organization to come up with integrated, consistent plans and actions for each of these stakeholder groups? It would not be appropriate to have a customer program from PR, marketing, sales, etc. They would have to develop it in harmony. Similarly, there would be one organizational plan for investors, employees, government, etc.

If the organization incentivized integration and penalized silos, it would soon find that the traditional silos would begin to break down. Granted, each of these activities would need an expert steward (marketing, communications, finance, etc.), but the concept of “ownership” within an organization would begin to unravel.

What this would mean is that everyone would really need to fully understand what he/she did to add value and stop arguing over small bits of turf that may be intellectually interesting and functionally relevant, but add little value to the organization. Those who knew their stuff the best and had the best ideas would win, not just those who were appointed kings of a function.

When I was at Nortel, I headed both marketing and communications. I had a VP of Advertising who, as one would imagine, wanted to talk about advertising. I changed his title to VP, Customer Relations. His plans almost immediately changed. We gave prominence to those who headed Customer, Employee, Investor and Government activities. We asked all of the other communicators, trade events people, etc., to work with these VPs of major stakeholders to support them. The media were seen by us as being vehicles, not a key stakeholder. It was one small start to what we did throughout the company. Many in my organization argued that I was killing traditional PR; others said I was killing traditional marketing. Clearly I was. That was the intent.

In much of my work now with companies, I attempt this conversion through “Stakeholder Relations Councils”, bringing together all of the relevant functions to work together to integrate strategy with brand to engage the organization and enhance reputation.

University Branding Becomes a Major Topic

Universities have really gotten into branding in a major way. New firms are forming that focus exclusively on the academic market. Articles are being written in various marketing and academic management journals about the importance of branding.

Why is college/university branding moving into high gear? The cost of an education in the US has become extremely expensive. At the university I teach at, which is a private institution, undergraduate students pay about $47,000 per year when all expenses are included. The MBA costs anywhere from $50,000-85,000 at our university, depending on the program selected (on-line versus full-time or executive MBA). At the same time, there are more students attending colleges and universities. So, the perceived value of the degree takes on greater importance. Companies want to know the value of potential employees have, parents begin to be concerned about where their son or daughter will receive an education that is valued in the market, and universities are concerned with their ability to attract the best and brightest students available. All of this adds up to a major reason for branding. University rankings become extremely important. They put the value of the university into context--allowing it to be assessed against others in the market.


I believe that universities should be talking about their reputations rather than their brands. Brand is focused primarily on consumers. Universities do not have consumers or customers, but rather a host of stakeholders, including, parents, alumni, corporate donors, government (for grants and ,in the case of public institutions, funding, and others). The term reputation is more acceptable to faculty. Everyone wants a good reputation for their schools; not everyone wants the university to think of itself as a brand.

It is difficult to have a university live its brand or reputation. A friend of mine once called a university a "group of anarchists sharing a common parking lot". Faculty do not like to be managed. They see themselves as independent contractors, each vying for their own position and fame. University tenure encourages this. A faculty member who plays as part of the team and serves his/her department and college well but does not publish is less valuable than the faculty member who does little in concert with others but who is a publishing "machine". So, it is difficult, if not impossible for a university to live its brand.

Far too often, universities fall into the trap of thinking that their slogan is their brand. The slogan of my business school is "Learn Here. Lead Anywhere". This is not our brand. Our brand is about attributes, namely co-op education, technology and applied research. Put those together and offer them to students and one has an environment that allows people to learn at Drexel and lead anywhere afterward. Just like in a company, the key is to link the slogan back to attributes that are real to the university.

Reputation Trumps Brand is a Crisis

The move by Accenture and Gillette to drop Tiger Woods shows the power of reputation and the concern of boards about reputation risk. Brands are important, but they are related primarily to customers. Reputation is related to all stakeholders, and in a crisis, companies look to manage their relationships with all stakeholders and some of these concerns may trump the customer.

Years ago, DuPont had a situation with Benlate, a pesticide that was rumored to be burning cotton crops after a rain. The division argued to maintain control of the situation and keep it between the product management and the customers. By the time the board intervened, the cost had escalated to nearly $500 million. Investors were concerned about the company's insurance protection; lawsuits were pending; employees were questioning DuPont's commitment to environmental safety. The company learned a lesson. It should have made the situation a corporate issue rather than a division one.

In contrast, when Tylenol was tampered with in 1982, J&J didn't allow the crisis to be managed by McNeil, the division that makes Tylenol. They immediately made it a J&J issue. When Kidder Peabody, the investment firm that GE used to own had an scandal involving a broker who stole from his clients, Jack Welsh immediately made it a GE issue, taking responsibility away from K-P to manage it.

Accenture had to act. It is a consulting firm. Its value is entirely intangible. That is, it does not make or sell products, but rather gives advice. Its value is its credibility, its reputation. Anything that impacts that reputation is a threat to the firm's perceived value to clients. Tiger was the association they previously wanted. "Come on, be a Tiger" was the slogan. Tiger's winning, his talent, his aggressiveness, his intelligence, his personality, were the associations Accenture coveted. Tiger is now a tainted set of attributes. His association is no longer positive. He is a joke line on Letterman and Conan. Not the stuff Accenture can tolerate.

Reputations, like brands, are comprised of symbols, attributes and associations. The difference is that reputations are based upon a larger number of stakeholders. Brands are what firms decide they want to be seen as; reputation is how stakeholders see them. The reputation of other companies that Tiger endorses are all watching this. Someone has to be first--that was Gillette. I know that the calls are going on within the management teams and board rooms of AT&T, Nike, Rolex and other companies that "employ" Tiger. They are all asking the same question: "what is the impact on our reputation? Can we take the risk? Do we want to be the last company defending our association with him? What are we hearing from employees, customers, special interest groups, the media, investors and other stakeholders?

Reputation management is the process of balancing the financial interests of the company against the needs and interests of the company's many stakeholders. An endorsement is a brand association. The endorser's attributes help further enhance the performance characteristics of the brand. Tiger is "tainted goods". He may still be the greatest golfer in the world, but his personal character is under question. His attributes no longer are desirable association.

I heard one professor on TV claim that the contracts Tiger has are unbreakable. I am not sure what this fellow knows or doesn't know about the subject of contracts. Typically, companies have a clause in these contracts that allows them to be broken if the endorser does something to create risk to the company. All of the companies that have signed Tiger are intelligent companies. I can't imagine that they do not have clauses that allow them to cancel the contract without further payment.

This is a sad situation all around. But, it is an interesting learning situation showing how not to handle a crisis and also the importance of reputation.

Tiger's Death by a Thousand Cuts

So now the news is that Gillette has decided to stop its advertising with Tiger Woods. It seems that we are now seeing his death by a thousand cuts. My prediction is that others will hold on but start to back off if things continue to deteriorate. Gillette, a men's brand, spun it that they are giving him the time out of the spotlight he needs. It's the time out of the spotlight they need in association with him. You don't give a winning brand time off; that is reserved for question marks. As of this writing, Accenture just announced that they were ending the sponsorship with Woods saying that he no longer represents the type of person with whom they want to associate.

Let's keep in mind that Gillette is owned by Procter & Gamble. P&G has always been protective of its reputation and the primary focus on P&G, other than Gillette, is woman. They position themselves as a family company. It makes sense that they would back off Tiger until they better know where the "wind is blowing". The postured this as being on his side, but they are playing both sides in this one. They step aside from having Tiger associated with them, and for those who support Tiger they can say that it is done for him. Well played, sir!

Companies are very concerned with their reputations. This has not been a good year for corporate reputation, with all indicators of trust at record lows. Companies do not like controversy or to be caught in situations in which they have to defend the actions of another--they have enough problems defending their own actions. Woods now is a problem.

As I have said before, this did not have to be this way. Tiger still has not stepped in front of the cameras. He continues to speak through his website. Who the hell is giving him PR advice? Whoever it is should be ushered into the PR Hall of Shame. This is one of the worst example of handling a crisis I have seen. Tiger is allowing everyone to control this story other than himself. This is not an age when the news media take a quote from someone. This is an era of 24-hour news outlets that need to manufacture the news they cannot get otherwise to attract interest. They are sharks and Tiger is bleeding.

The first rule of a crisis is to take control of the situation, tell the truth, and take the offense rather than the defense. Admit your mistakes publicly, muster a few tears and look contrite. Do something, but stop hiding behind a manufactured, impersonal website. For those who think this is Tiger speaking to us directly through his site, let's get real. He has an entourage and they are hard at work. They are either terrible at their jobs, or he is the worst client they have ever had and refuses to listen to their advice.

While we're at it, can someone please tell David Letterman to stop with the Tiger jokes. He keeps referencing Tiger's problems and associating them with his own. He has a wife at home as well. Cool it, Dave. You came out of this looking like someone taking the high road. Don't go low road and ruin everything for a few laughs.

Credo Mobile--a New Take on Social Marketing

I just got mail for a new phone carrier called Credo Mobile. The concept is a really interesting one, combining a product with concepts learned in social activisim and now called social networking when applied to the Internet.

This is a unique and different way to create a community and one with the power in the palm of its hand to influence policies. For some time we have been hearing about social investing. Now, we have a product that focuses on a community that cares about liberal social causes. They are out there. They came out in record numbers to help elect Barack Obama President. They are connected through social networks, just like other communities of interest. There are communities on the right as well.

The CEO is Laura Scher, a social activist from San Francisco. The slogan for the company is "More than a network, a movement". From the literature and website, it seems that Scher was upset by positions taken by AT&T, Verizon and others who decided not to back liberal social positions to avoid potential conflicts in their market. They also were upset by the political contributions from the big phone companies that go to conservative politicians who oppose abortion rights or woman's rights.

So, the idea is that one switches away from their current wireless carrier and contracts through Credo, which runs its own network. They will buy you out of your current wireless contract. A portion one pays each month to Credo goes to organizations like Greenpeace, ACLU, and others.

I'm going to assume that the network is viable and that one will not have problems making and receiving calls or dropping calls in progress. Regardless of commitment, people are not going to stay with a wireless network that does not meet fundamental, function requirements.

I find this concept really interesting because it is once again a use of technology to find and collect a community of like-minded people. While Scher lives in San Francisco where there are many people who will find Credo of interest, I am most happy for the poor liberal who finds him/herself stuck in a conservative community and feels like a complete alien. Now, they can find others to connect with. That's the beauty of technology.

Credo and other such plans serve the niche market. The web has made it possible to create what Christopher Anderson termed the "Long Tail", the ability to serve niche needs that were not economically possible in markets governed by economies of scale. I'm sure we will see others networks like Credo. I would imagine that some conservative group will hear about this on Hannity or Glenn Beck and start a phone service that gives only to those who oppose abortion rights or are against climate change legislation.


What we are seeing again is that brand is an emotional connection between product and consumer. In the past, we had to deal with the mass market, even if we did not identify with the attributes. We had few choices. Laura Scher and her team were put off by the attributes and associations of Verizon and AT&T. In the old days they would have sent letters to the editor and send out fliers to their neighbors. Today, they create a new company to collect people with similar values and beliefs who not only will talk on the telephone, but also can use it to lobby and further build the case for their causes. Very ingenious! While some will be offended by the causes Scher supports, they now have a business model they too can follow for their own community.

Maintaining an Exclusive Brand

I teach at a university. Every time I give out grades, I am reminded of the value of a brand and how it can be supported or eroded. Grades have been inflated in recent years. During the time I was working on the corporate side, grades began to rise across the board. Students now think they are flunking out of school if they receive a "C", which --to date myself used to be called a "gentleman C". It meant that one performed average in the class. Some people were better, some worse. In undergrad, I was a "B" student. There were a few "A's" sprinkled in, with mostly "B's" and even some "C's" in some courses. I was a good student at the time.

The grade of "A", which is supposed to mean excellent work, now is expected by students for good but not excellent work. Everyone has an excuse why they deserve an "A". They worked really hard, they have scholarships that need to be protected, etc. We now have a generation of students who all got trophies. They were all told they were wonderful. Heaven help the teacher who told a student that they were not excellent!

Let's turn this discussion and think about it from a brand-product perspective. What would someone say if they indicated that they needed Tylenol but because of other circumstances wanted it at generic prices? It would erode the value of the Tylenol. Why support a brand if there is no value perceived in it?

Of all the things I love about returning to teaching, the thing I hate most is grading. The value of the grade (the brand) has been ripped out. If everyone can get it, what value is it to those who truly deserve it? On a larger scale, this is what has happened to the value of a bachelor degree. If everyone can get one, where is the real value? So, that starts a hyped competition for students who want/need to get into so-called elite schools--the Prada or Guicci of universities.

This is a very US phenomena. I recall in the 1960's a discussion a British fellow had with my father who was bragging about the large percentage of American students who go to college. "What will you do when you need a B.A. to run an elevator or sell shoes?" asked the Brit. He was right. He saw that the value of the degree would be eroded. In many countries, there are exams that separate who can attend university and who cannot. This has its downside as well since many students who do not do well on large, standardized tests are excluded from universities in their home countries. The US does allow those who are "late bloomers" or creative types to find their way. It has helped US innovation. However, there has been a cost. In Canada, there has been less delineation amongst the many universities in terms of quality. All universities are government owned and all are deemed to have quality--a bit different in some cases, but quality none the less. So, a degree is a degree. Kind of generic, which also has its downside since people want differentiation when price goes up. They want to know if there is value in their purchase. Students (or their parents) do not suffer depression or stress over whether little Johnny or Joan is getting into University of Toronto vs. Brock. There even is pride in students who go to 2-year colleges because that is where one goes for the education that in the US is reserved for 4-year colleges (nursing, kindergarten teacher, graphic design, public relations, advertising).

Universities are brands. Grades are brands. People are brands. Brands are comprised of attributes and associations and symbols that have meaning. Erode the meaning and the brand begins to erode.

Gatorade Pulls Its Tiger Connection

Pepsi, the owner of Gatorade, has decided to drop a drink named after Tiger Woods. The timing is curious. Gatorade said it was decided before the whole "Tigergate" incident; many think the timing is more than coincidental.

The truth is likely somewhere in between. Gatorade is a product that is in trouble. It had a good market position and then, like the other Pepsi brands, was rebranded last year. Gatorade became "G", I would imagine to give it "street cred". The ads are harder-edged which supports my contention. Somehow, Pepsi decided it had to make the product more current and hip. The results have not been good. Reports have indicated that "G" has lost market share. This comes on the heels of Tropicana, another Pepsi brand, which had to reintroduce its old packaging after customers strongly objected to the new package design. The logo for the Pepsi product, which changes depending on the product, was criticized for being curiously similar to the Obama campaign logo--Pepsi said it was pure coincidence.

This has been a terrible year for Pepsi brand management. It did not have to be so. In the new world, Pepsi could have co-created the package designs with customers and gotten strong customer buy-in. Pepsi, instead, acted like it was pre-Internet days and did its branding in secret between the chief marketing officer and an outside branding agency.

Companies are not in control anymore. Brands are shared and are part of customer experience. They always have been but now customers can act on their likes and dislikes more aggressively. Pepsi needs to wake up to the new world. It claims to be the brand for a "new generation" but acts like it is managed by the old one.

Back to the question of whether or not the dropping of the Tiger brand was preplanned or is in reaction to his marital infidelities. As noted, I think the truth lies somewhere in between. Gatorade is in trouble and is looking for ways to reconnect with its original customer base which it is loosing. Tiger is an expensive endorsement and likely too expensive for a brand in trouble. The problems Tiger has had likely pushed the decision to the front burner.