Dr. John Izzo on Brand Makers and Breakers

If anyone doubted the impact of corporations on society just take a close look at the last two years. The decisions of large financial institutions to leverage risky assets nearly caused a second Great Depression leading to a massive bailout by governments. That bailout has lead to huge government debt and threatens now to cause what many feared -“the double dip.” Few financial firms took real responsibility for the carnage suggesting for the most part that “everyone” was doing it.

Meanwhile, oil is gushing uncontrolled into the Gulf of Mexico from a BP oil rig threatening not only an entire fishing industry but sensitive wetlands all along the Gulf coast. Watching how BP is handling this situation is a case study in brand making or in this case, brand breaking. Over the last ten years BP has branded themselves as the “most responsible” oil company in the world and told us that BP stands for “beyond petroleum” and yet instead of really taking responsibility for a culture that apparently let safety slip, they are spending their time pointing the finger at other companies saying it’s not our fault. Just as Exxon has never recovered fully their brand image from the Valdez and how they handled that situation, so BP may never recover unless they step up and own up.

Contrast BP’s response with similar situations in recent memory. Toyota built their brand based on quality so an accelerator pedal that does not let you stop the car is bad news. Even though the pedal was made by another company, Toyota apologized publicly to their customers saying we “let you down” and seems to be systematically trying to address the situation. Maple Leaf Foods in Canada had a food safety issue a little over a year ago that literally killed customers. That is a pretty big brand breaker! Yet by taking responsibility and apologizing deeply to their customers and letting everyone know how profoundly affected they were by what happened, the brand has come out almost unscathed.

Those of us who run companies must never forget that the decisions we make impact the lives of real people and even the larger world. Whether we sell financial instruments, cars, food, or pull resources from the ground, the decisions we make have implications well beyond the bottom line of our own enterprises. What’s more, we can never forget how fragile our brands are. The percentage of a company’s value attributable to good will has increased five fold in the last thirty years. That is, a company’s value is less about the book value of its physical assets and more about how consumers view the brand. And remember this, as we reported in my book Values Shift, the single factor that has made the biggest gain in the last decade in terms of why we buy from or want to work for, a company. You guessed it-Social Responsibility.

Warren Buffet may have put it best: “It takes twenty years to make a reputation but only five minutes to ruin it. If you think about that, you will do things differently.” So BP, this is your five minutes.