Future Proofing Brands For An Era of Digital Transformation21 July, 2016 Share socially
Eli Lilly Professor of Strategy and Innovation
What does it take today to keep a company and its brand at the top? While every industry has its own unique strategic challenges and opportunities, the last few years have seen digital becoming a top priority for more and more corporate leaders. Just as growth in India, China and other emerging markets was a key driver of corporate performance over the first 15 years of this millennium, digital promises to be the defining trend of the coming decade, or more. We have moved from the era of BRICs to the era of clicks. An Index, published today by FutureBrand, ranks the world’s most valuable 100 companies by how positively the global public perceive them. It clearly highlights the growing importance of digital to a company’s ability to forge and sustain a top brand. Not only are leading tech companies like Apple, Microsoft, Facebook and Amazon in the top 10, but consumer services companies like Inditex, LVMH and Nike, which have taken the lead in embracing the new digital business playbook, are seeing strong advances.
A digital industrial revolution is unfolding all around us. The underlying technologies are now mature: cheap and powerful computing power, massive interconnectivity and seemingly limitless data storage. Amazing new products and services are emerging. Just as with the development of mass production technology before, business and society is now engaged in the long journey of learning how to fully leverage the new technologies to delight consumers. We are seeing the modern equivalent of the emergence of packaged food, home appliances and the automobile.
Production and branding are closely linked. It was mass production that made brands critical for business success and fuelled generations of advertising campaigns. Today’s digital production brings its own rules. Steve Jobs, with his obsessive focus on design and outstanding customer experience, redefined branding for the digital era. It is no accident that Apple is at the top of the Index. Whether at work or at home, we expect our favourite brands to deliver convenient and compelling digital experiences that show that they understand our needs better than we do ourselves.
Delivering on modern expectations increasingly calls for a digital transformation of the entire company. A well designed mobile app and web interface is just the beginning. The challenge is to reengineer the rest of the company’s internal activities to match the convenience and personalization of the digital experience. For some, like Facebook (up 15 places this year), the backend is fully digital as well. For most companies though, they need to transform and integrate their physical operations. What is especially impressive about Amazon (up 26 places) is that they have done the hard work of developing the physical logistics to unlock the potential of online retail.
Like a meteor hitting the ocean, the waves of the digital revolution are fanning out across business and society. The movement from the tech sector to consumer services is well underway and others are feeling their boats begin to rise and fall. Mastering digital capabilities will determine whether the healthcare sector can sustain its strong position in perception terms (three companies currently in the Index top 10). Fundamentally an information business, the financial services sector faces even greater pressure from rising digital expectations – and this just as this year’s Index shows them finally rebuilding their brand equity from the impairment of the financial crisis.
Indeed, the financial services sector offers a powerful illustration of the forces impacting today’s leading companies and their brands. Across the world, mobile banking is increasingly the channel of choice for customers. Not only do legacy IT systems and organizations need to be transformed, but so do the bank’s core processes to allow them to compete in a digital age. Both retail and corporate clients increasingly expect speed, convenience and personalization in everything from account creation and payments to loans and investment advice. Those banks that lag in transforming their services and organization can expect to see their market capitalization transferred to those that are able to play by the new digital playbook. This includes not only their traditional competitors, but also the hundreds of recent fintech start-ups. Perhaps even more threatening, the leading tech companies, with their powerful brands, are targeting growth in financial services.
Industry lines are blurring. First music and media, now financial services and soon automotive are seeing competition from tech companies. One can expect that the flexibility of digital platforms will continue to drive industry convergence. It is no longer enough to evaluate your brand relative to those in the same sector.
Digital technology is amazingly powerful. At the same time, modern society is incredibly complex. It will take years to first discover how to fully exploit the new capabilities in products and services and to then develop the organizations that can deliver them. This is far more challenging strategically and organizationally than what we have lived through with the dramatic growth in emerging markets. Earlier industrial revolutions played out over decades. There is no reason to think that this one will be different. Despite the radical changes, brands are proving to be as central and decisive in the digital age as they ever were. However, what it takes to establish a leading brand is clearly being transformed. Years of success could hinge on your company’s ability to embrace the new paradigm. Is your brand future proof?