Why was Jim Stengel’s ‘Grow’ so popular when it’s so flawed?

richard shotton
3 min readNov 11, 2015

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Is it possible that there’s a common approach shared by the world’s most successful brands? Grow, published by Jim Stengel in 2011, was an ambitious attempt to find out. His findings had a significant impact on the marketing community with Sir Martin Sorrell saying he was ‘utterly convinced’. Strong praise indeed.

However, did Stengel genuinely discover the secret to brand growth?

Let’s begin by recapping Stengel’s approach. The project started by selecting the brands with the highest bonding scores from Millward Brown’s 50,000-strong database. The star performers were termed the Stengel 50.

Stengel then searched for a link between the brands, which he found to be a ‘Brand Ideal’ — a shared intent by everyone in the business to improve people’s lives. Next he looked at the chosen brands’ stock value growth between 2000 and 2011.

Since the Stengel 50 had grown by 393% compared with a -7% loss for the S&P 500 benchmark, he declared that ideals were driving business success. Ideals supposedly didn’t just drive growth, they led to stratospheric success.

However, Stengel deliberately chose Millward Brown’s most successful brands. It’s not surprising that the most successful brands had performed well financially in previous years. If they hadn’t delivered shareholder returns, it’s unlikely they’d be in the top 0.1% of brands. It’s a circular piece of logic.

The next serious issue is that Stengel’s definition of a brand ideal is so malleable that it can be adapted to fit most brands. For example, Stengel defined the ideal of Moët & Chandon as ‘existing to transform occasions into celebrations’. This ideal is little more than a category descriptor. This isn’t just a subjective opinion.

When we asked 1,000 consumers to match one of six brands to the ideal only 6% of consumers chose Moët. By having such a flexible definition it could be made to fit whichever brands made up the best-performing set.

Another significant flaw is that Stengel did not compare the best-performing companies with underperforming ones. To claim that ideals drive growth, it is necessary to show that successful companies are more likely to abide by a brand ideal than poor performers do.

However, dreadfully performing brands could equally be said to be defined by ideals. One could claim that Nokia existed ‘to connect people with one another and the content that is most important in their lives, anytime, anywhere’. Having this ideal didn’t stop its shares declining by 96%.

The validity of the argument is best checked, though, by examining the performance of the Stengel 50 since Grow’s publication. If an ideal were driving their success then we’d expect their overperformance to continue for a few years.

We looked at the stock price for each relevant brand from January 2011 to December 2014 and compared it to the relevant benchmark. The Stengel 50 didn’t do well: the over-performance dropped from 400% to a far less substantial 27%. Of the 23 brands monitored, only 12 outperformed their benchmark. This data focuses on the brands that weren’t part of much larger holding companies, to make sure it’s meaningful.

So if it’s flawed, why was Grow so popular? Perhaps its appeal is the straightforward solutions it offers time-pressed managers. Simplicity is more appealing than a realistic, but nuanced, explanation. Who wants to hear about improving the probability of success when a pundit is peddling certainties?

Despite Grow’s popularity, no one has yet uncovered the single secret to sustained business growth nor is anyone likely to. Unfortunately, it won’t be long before someone else tries.

@rshotton

Originally published on Mediatel. Written by Richard Shotton & Aidan O’Callaghan

http://mediatel.co.uk/newsline/2015/11/10/why-was-jim-stengels-grow-so-popular-when-its-so-flawed/

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richard shotton

Head of Insight at ZenithOptimedia. Interested in how social psychology & behavioural economics can be applied to advertising. Follow me on twitter: @rshotton