Every business has a corporate brand that requires attentive management. Brands have an innate power to either hurt or help a company; the organization determines which of these two possibilities becomes reality through the ways in which it leverages the brand.

Sometimes the corporate brand is thought of as a cost center, but organizations are better served by viewing it as a business asset. A company needs to understand its brand, gauge its effectiveness and potential, and manage the brand as it would any other asset.

This is a challenging proposition. A corporate brand affects multiple audiences, both internal and external. Internally, a brand touches employees, management, shareholders, partners, and vendors. Externally, the brand can reach the media, prospective investors, customers, and everyone else who interacts with the organization.

Ongoing research by brand management firm CoreBrand has revealed the attributes of a company's brand that help it to improve an organization's image and performance. CoreBrand conducts a continuous quantitative benchmark tracking study of 1,200 companies known as the Corporate Branding Index. We rate the effectiveness and efficiency of a company's brand in a measure we call "brand power." The brand power score indicates how effectively a corporate brand is working for the organization. We arrive at the brand power score using attributes of both a brand's familiarity and its favorability.

A corporate brand's familiarity is influenced by a company's communications strategy and marketing budget. The size of a company usually determines the communications spending; larger companies tend to have larger budgets to tap into. There are exceptions to the rule -- Starbucks and Google do not spend a lot of money on traditional advertising, yet they enjoy tremendously strong brands. Still, most companies need to invest capital in communications before a visible return on investment (ROI) is achieved and the corporate brand's familiarity score rises above the industry "white noise."

The pharmaceuticals industry is an excellent example. Exhibit 1 shows the correlation between spending (horizontal axis) and brand power score (vertical axis). The black line is a trend line showing how corporate advertising spending, on average, affects brand. In general, companies in this industry need to spend $10 million on advertising to clear the industry white noise and stand out against competitors. St. Jude Medical and Kimberly-Clark are clear exceptions to this rule, as they have achieved high brand power scores despite minimal marketing budgets.

We derive a corporate brand's favorability score based on three key components: overall reputation, perception of management, and investment potential. By carefully managing these three elements, a company can create "brand clarity."

Brand clarity is an advantageous alignment of a corporate brand's three favorability attributes. A company's reputation is created through the actions of its employees, which are visible to investors and customers alike. Companies need to create a clear and concise mission statement, communicate it to their employees, and train them to "live the brand." When investors perceive a company to have a strong management team, a solid brand reputation, and corresponding customer loyalty, they will be predisposed to invest in that company. Obviously, a company with a weak management team, fragile brand reputation, and little customer loyalty would be seen as a high-risk investment.

Developing Brand Metrics

In order for a company to calculate the value of its brand -- and justify investing in that brand's development -- it needs to evaluate its brand's performance using a set of measures and metrics. As mentioned, CoreBrand consistently tracks the familiarity and favorability scores of 1,200 public corporations. By determining not only the prominence, but also the popularity of a company's brand in the marketplace, we can start to determine where the brand ranks within the industry. We perform this work as a research and consulting firm, but companies can choose to create a similar, internal process for monitoring the power of their own brands.



A combination of familiarity and favorability metrics can help a company to track its brand and determine which initiatives are necessary to build its brand power. A set of measures based on the values the company feels are appropriate -- which can range from customer satisfaction to management integrity to employee training -- lays a solid foundation. Creating a scorecard based on those values can help the company to monitor whether its brand-building initiatives are effective.

The methods a company chooses for tracking its brand's performance need to be clear, consistent, and continuous over time. Maintaining a solid process ensures that the data collected is timely and can be compared over time to determine any trends. If the data changes over time, the company can then strategize accordingly. In practice, integrating brand management into routine corporate performance management activities is a good idea.

In the extensive research underlying my book Five Key Principles of Performance Management, I (Paladino) identified a handful of best practices that set highly successful organizations apart from their peers; they follow a discernable pattern of performance management actions that is illustrated in Exhibit 2. In the June 2008 issue of BPM Magazine, I co-authored an article titled "Moving Strategy Forward: Merging the Balanced Scorecard and Business Intelligence" that explained how to base real-life performance management processes on the concepts of strategy maps and the Balanced Scorecard. It described the principles in Exhibit 2 in some detail in the context of managing the organization's overall performance.

Since we don't have space here to delve into all of the best practices, we'll just touch on Principle 2: Refresh and Communicate Strategy, and we'll focus mostly on Principle 3: Cascade and Manage Strategy -- using the Balanced Scorecard for brand management.



Developing Brand Metrics

In order for a company to calculate the value of its brand -- and justify investing in that brand's development -- it needs to evaluate its brand's performance using a set of measures and metrics. As mentioned, CoreBrand consistently tracks the familiarity and favorability scores of 1,200 public corporations. By determining not only the prominence, but also the popularity of a company's brand in the marketplace, we can start to determine where the brand ranks within the industry. We perform this work as a research and consulting firm, but companies can choose to create a similar, internal process for monitoring the power of their own brands.

A combination of familiarity and favorability metrics can help a company to track its brand and determine which initiatives are necessary to build its brand power. A set of measures based on the values the company feels are appropriate -- which can range from customer satisfaction to management integrity to employee training -- lays a solid foundation. Creating a scorecard based on those values can help the company to monitor whether its brand-building initiatives are effective.

The methods a company chooses for tracking its brand's performance need to be clear, consistent, and continuous over time. Maintaining a solid process ensures that the data collected is timely and can be compared over time to determine any trends. If the data changes over time, the company can then strategize accordingly. In practice, integrating brand management into routine corporate performance management activities is a good idea.

In the extensive research underlying my book Five Key Principles of Performance Management, I (Paladino) identified a handful of best practices that set highly successful organizations apart from their peers; they follow a discernable pattern of performance management actions that is illustrated in Exhibit 2. In the June 2008 issue of BPM Magazine, I co-authored an article titled "Moving Strategy Forward: Merging the Balanced Scorecard and Business Intelligence" that explained how to base real-life performance management processes on the concepts of strategy maps and the Balanced Scorecard. It described the principles in Exhibit 2 in some detail in the context of managing the organization's overall performance.

Since we don't have space here to delve into all of the best practices, we'll just touch on Principle 2: Refresh and Communicate Strategy, and we'll focus mostly on Principle 3: Cascade and Manage Strategy -- using the Balanced Scorecard for brand management.

How Do Branding Strategic Objectives Relate to the Balanced Scorecard?

A strategy map is a combination of a company's strategic objectives and the Balanced Scorecard, with its four perspectives: the financial and customer perspectives (which are primarily lagging indicators), and the internal process and people-and-talent perspectives (which are primarily leading indicators). These perspectives form the basis for "balanced" performance management or, in this case, brand management. Fortune magazine reports that nearly 40 percent of Fortune 500 companies today have a Balanced Scorecard program in place to manage performance. We refer the reader to Drs. Kaplan and Norton's global best-selling book, The Strategy-Focused Organization -- How Balanced Scorecard Companies Thrive in the New Business Environment (Harvard Business School Press, 2001), for a more complete discussion.

In the case example we discuss here, ABC pharmaceutical (a pseudonym) defined strategic objectives and Balanced Scorecard measures for its brand management theme. A full strategy map would include two other themes -- New Product Development and Regulatory Compliance -- which are not discussed in this article.

The people-and-talent perspective focuses on the "T1: Manage Talent" objective by measuring the number and quality of brand experts on the organization's staff. If a company can develop and retain brand experts, it will be able to execute more effectively on the internal process perspective and the related measures:

P1: Share Best Brand Practices
P2: Gain Market Access to Specialty Markets
P3: Improve Product Awareness and Advertising
P4: Leverage Brand Teams to Increase Revenue

The people-and-talent objectives and measures, along with the internal process objectives and measures, contain leading indicators of brand management success. These indicators then directly affect the customer and financial perspectives. If the company can actively manage these processes, it can successfully build its customer perspective objective. The alignment of internal processes with people-and-talent processes gives a company the leverage to build brand favorability and familiarity, which results in brand loyalty.

When strong brand loyalty has been built, shareholders will be more responsive and willing to invest. This investment builds brand revenue. This revenue can then be used to expand the brand talent base and start the cycle all over again.

The brand management strategic objectives and Balanced Scorecard measures across the four perspectives can form the backbone of a company's brand management strategy.

Comparing Performance with That of Peers

Once it has established a method for determining its familiarity and favorability ratings, a company can compare its performance with that of its peers. Exhibit 4 shows how CoreBrand compares companies in the same industry, plotting the location of each on a grid in which favorability is reflected on the horizontal axis and familiarity is reflected on the vertical axis. Exhibit 4 shows that, depending on a company's brand loyalty score (i.e., the combined favorability and familiarity score), it can be labeled a "leading brand," a "promising brand," a "rebounding brand," or a "challenged brand."

This exhibit plots the brand loyalty of several health care organizations. Those with a high score in both familiarity and favorability, such as St. Jude Medical or Johnson & Johnson, have brands that are widely known and considered dependable. These companies are leaders in their industry. A step down from this level of respect, you find companies like C.R. Bard, which is highly favored but not very well known. These organizations need to make themselves more visible while maintaining their good image among the people who are familiar with them.

The companies with brands that are "rebounding," such as Aetna and Humana in Exhibit 4, are well known within their industry but are not held in high regard among consumers. These companies can see that they must invest more effort in proving themselves to be worthy of customers' trust. At the bottom of the pile and needing the most work are those brands that are not only known very narrowly, but also are regarded poorly by those who are familiar with them.

Leading organizations are recognizing the value of integrating their branding strategies with leading-edge Balanced Scorecard management tools. There are proven data sets to enable brand value creation. A company can align leading internal process and people-and-talent goals to drive the lagging customer and financial perspective goals. Integrating brand strategies with strategic performance management provides for competitive advantage in the marketplace.