Iconic Brit Brands in Crisis?
How to salvage British Airways, Marks & Spencer, Cadbury & more
Once upon a time, kids in Britain grew up with brands they were practically hardwired to love.
Names steeped in our childhoods and national identity, like Marks and Spencer, John Lewis, Cadbury, British Airways.
All names that had that extra bit of forgiveness and love from customers, just because of their long history and special place in the national canon.
But not for much longer, on current rates.
The culprit? A seeming collective pact to commit harakiri in the name of short-termism.
Out the window: history, and the brand as a cultural asset lasting well beyond the lifetime of each passing CEO.
So let’s break it down.
Each new CEO has a limited lifecycle, say, 2–5 years. Within that period their number one goal is to make a mark and boost profits, come hell or high water. That typically means slashing costs.
The brand, on the other hand, has a potential lifecycle of generations. Your great-grandparents ate Cadbury’s chocolate, but the CEO could be gone before Christmas. And it’s the brand that needs long-term care and investment — not the CEO’s ego.
Take poor British Airways, formerly known as ‘the World’s Favourite Airline’. In 2017, it’s fast gaining a new worldwide reputation as a price-gouging service-cutter. Alex Cruz, its famous slasher-king CEO (ex-boss of ultra-low-cost Spanish airline Vueling), puts on a brave face. No, it wasn’t the outsourcing of IT jobs to India that grounded all flights over the May Bank Holiday weekend. Yes, reducing in-flight service is an ‘enhancement’ that customers want. And so on. Small mercies: it doesn’t (yet) beat up its customers (that’s you United).
But it does feel like a tipping point has been reached all the same. Where cut costs actually damage the thing you’re trying to protect — profits. Why? Because brand suffers — and as an intangible asset, it’s far more expensive to fix and hard to assess. Yet far more valuable over time.
If you doubt it, just consider all that lost revenue on forward bookings BA will now inevitably face. The drift to lower-cost competitors whose service in short haul is now practically identical. The hesitation higher-spending customers will have when faced with a choice of premium operators who don’t slash as publicly or deeply.
BA is far from alone. Take Cadbury, now in American hands: quick to slash jobs despite promises to the contrary. John Lewis, with its nowadays almost unique Victorian cooperative ownership ethos is now cutting back on dividends and gently moving away from its model.
Or Marks and Spencer (ironically, BA’s partner for paid in-flight catering). Sure, their mid-market paisley blouses fell out of favour while their higher-end food offering soared — a classic reflection of how mid-market brands generally have struggled to cut through in a world of more picky, mix-and-match consumers (think: customising Primark with Polo Ralph Lauren; buying fruit from Waitrose but prawns from Lidl).
Their problem is also short-termism in a different sense. What about their international real estate? Around a decade ago, they closed their iconic store in Paris, and many others, to retrench. Several years later, and a new CEO. Guess what? Those stores reopened across Europe and beyond to much fanfare. In 2017 — what a surprise, they are all being closed. Again.
This is not only ruinious to the environment — all those store fittings ripped out, put in, ripped out, put back in again, but absolute lunacy in brand terms. And it’s all because of the way CEOs are incentivised on their short-term performance.
I don’t have the full insight or means to suggest lasting fixes, but we might start with this: don’t just measure performance on a quick uptick in profits alone. And for goodness’ sake, incentivise CEOs on measures connected to brand. Because brand is the real intangible asset that will go on generating profits long beyond their own shelflife.
It’s a message that has positive social implications too. If CEOs start to invest longer term, that means society benefits: stable companies, brands that form part of a cultural framework in which business is actively seen to be striving for wider value. All of it while still preserving the bottom line.
Seems like a no-brainer to me.
