The Post Post World. Post modern. Post literate. Post digital. Post ironic. Post 9/11. Post Enron. Post Andersen. Post brand.
We thought we knew the rules of the game. But lately it seems like someone flipped over the game board and a lot of pieces never made it back to the table. Our businesses—and our lives—are being buffeted by powerful economic and social forces. Four horsemen chase us in 2002: terrorism, corporate corruption, spiritual crisis and recession.
TERRORISM. As the echoes of 9/11 continue to reverberate, homeland security has become a priority. The terrorist attacks initially cost 3,063 lives and $60 billion in damage. But the total economic impact is much higher. The war on terrorism has cost $60 billion since September 11, with $50 billion in additional defense spending slated for the future. The travel industry has lost 800,000 jobs, with airlines and New York tourism especially hard hit. Billions have been poured into disaster relief: $21 billion in federal aid; $676 million in Federal Disaster Assistance to victims and another $543 million from the American Red Cross. Fortress America has become the new mantra for setting foreign policy and tariffs.
CORPORATE CORRUPTION. In the business world, the back-to-back disasters at Enron and Arthur Andersen have managed to shake the most jaded executives. The Enron bankruptcy has resulted in 4,500 lost jobs; a $750 million settlement to cover 401(k)s and legal fees; one executive suicide; and thousands of shareholders left without retirement savings. Ethical questions about government loans and campaign contributions continue to be debated, along with the apparent grab-it-and-run behavior of top executives. Arthur Andersen has been criminally indicted, as have several corporations. The whole public accounting industry is now under scrutiny; financial fraud has cost investors over $100 billion in the last dozen years or so.
SPIRITUAL CRISIS. Corruption isn't limited to the business world. Hundreds of Catholic priests have been accused of sex abuse, and allegations of cover-ups are reported daily. Estimates of the cost of abuse-related lawsuits range from $300 million to $1 billion. 30% of American Catholics polled say they're less likely to give money to the church now. Public apologies have come from Cardinals Law and Egan. The Seattle Archdiocese is running ads defending their handling of the cases.
RECESSION. Terrorism, corporate corruption and spiritual crisis are new uncertainties that have been added to the ongoing recession. From the peak in March 2000, the aggregate market value of US stocks had plunged 22% by the end of 2001, a decrease of $3.7 trillion. Unemployment has risen from 3.9% in 2000 to 5.7%. There have been 1.2 million layoffs announced since 9/11. Industrial production has been declining and huge bankruptcies and near-bankruptcies have become constant reminders of our economic vulnerability.
BRAND OVERLOAD. The escalating economic turbulence of the recent past hit a corporate market that was already in flux. The past decade has brought a 62% increase in NYSE listed companies; a 15% rise in NASDAQ listed companies; and 5,100 IPO's. And none of these new companies can compete with Enron or Arthur Andersen for name recognition.
Why? Media overload. Short of being embroiled in a scandal, it's almost impossible to get your name in enough channels to build substantial awareness. Media has changed as dramatically as any other aspect of business. Since 1990, we have 4 times the number of television outlets per household; 10 times the number of print vehicles, 56% growth in magazines and an infinite number of web-based channels. The average Google search sifts through 3.2 billion pages.
The role of print advertising continues to shift. Mac-generated art continues to erode the ad/edit break; magazine landmarks like contents and indexes have migrated; editorial supremacy is lost.
The chances of building a brand have never been slimmer. The money investment is bigger than ever and the process is harder. Harder to differentiate yourself. Harder to cut through clutter. Harder to rise above the devalued role of advertising.
Look at a supermarket shelf. Having trouble finding the Campbell's Soup? 16,000 new supermarket products are introduced every year; the average supermarket now carries almost 50,000 products. Financial markets are seeing the same onslaught: 8,200 mutual funds in 2000 vs. 2,900 in 1990.
And brand is no longer limited to tangibles or even services; a "culture of brands" has emerged which creates a brand perspective for everything. Branded people. Branded corporate managers. Branded politicians. Everyone is now a brand and a brand manager. How do you differentiate yourself in a world of "brand yous"?
BRAND IS DEAD. LONG LIVE THE BOND! As the dimensions of our world change, communications strategy needs to change as well. It's time to move forward from concentrating on brands to concentrating on bonds.
In today's market, the bond created between a company and its clients or customers surpasses the value of a brand name. Bonding creates reciprocity and a long-term, profitable relationship. Bonding connects across lines of business, regions and constituencies.
The value of bonds is not limited to a company and its customers. An effective company needs bonds between its investor relations and capital markets as well. Not to mention the bond between management and employees.
Companies are now moving from defining their vision to defining their function. This function needs to be communicated—to customers, investors and employees—frequently, consistently, and interactively. The bond that evolves from targeted, consistent communication will propel your business forward while brands wither on the shelves.