Seven lessons that you need to learn to protect your brand

27 Nov

Ok, so let’s set the context; sometimes the things that people say or do, result in outcomes that they do not expect. For example, when innocent clowning around results in a serious accident or when an email sent between friends is innocently forwarded on to others and goes viral. When this happens it is commonly known as the law of unintended consequences.

Back in 1991 a British businessman Gerald Ratner, delivered a speech to some 5,000 people in which he unflatteringly described one of his own products as ‘crap’. At the time, Mr Ratner was one of Britain’s most successful businessmen, with a global chain of some 2,000 jewellery outlets. At the peak of his powers Ratner was known as the biggest jeweller in the world and his empire was worth well over a billion dollars. So why did he call his own product ‘crap’?

Well the comment was intended as a joke, but the joke went viral and the damage was terminal. In the aftermath of Mr Ratner’s comments hundreds of millions were wiped off his company’s share price, hundreds of its retail outlets were forced to close, thousands of its employees were laid off and Mr Ratner himself was eventually sacked. This commercial faux pas has since become known as ‘doing a Ratner’ and from the case study above, I have picked out seven lessons that you need to learn to protect your brand.

1. Handle your brand carefully, it is easier to break things than build things

If there is one salutary lesson from the Gerald Ratner case study, it is the fact that breaking things is easier than building things. Brands can be like fine art, they are painstakingly cultivated over time, but they need to be handled with care. In the unforgiving world of brand and reputation management, an item that is dropped unintentionally can break into just as many pieces as item that is dropped on purpose. As an individual or a business, you are never more than a custodian, steward or a caretaker of your brand. The key learning point here is that a brand is indeed incredibly delicate and once damaged or broken is extremely difficult to fix.

2. You can measure your value, but it is your customers who determine your worth

A smart business understands the very simple truth that its brand is determined and decided by its customers. That is why, in an effort shape the perception of would-be customers, many businesses spend so much time and energy trying to cultivate and craft their brand image. Customer perception is important because when it is positively disposed towards a brand, customers are much more likely to be confident in that brand and with confidence comes trust and with trust comes loyalty. The key learning point here is that customers bring considerable leverage to the table, because without their endorsement, there is no business.

3. Sometimes the biggest barrier to your success is your success

Nothing creates a culture of complacency more than the mistaken belief that you are above the possibility of failure. Sometimes success can create a sense of megalomania, which itself can incentivise increasingly risky or chancy behaviours. It is inconceivable that Gerald Ratner could have envisaged the extent to which an obvious joke, would be taken so seriously that it would eventually bring down a long established business empire. However, that is the inherent ‘danger’ of success, it can often blind us to reason and risk, encouraging us to do things that we would not normally consider. Perhaps the key learning point here is the need to constantly remind ourselves that success, like fire, is a good servant, but a bad master.

4. If you are going to ‘dis’ your product, make sure that your customers are in on the joke

Ironically, there are times when taking a jab at your own product can actually be part of a carefully thought out marketing or branding strategy. Consumers of the UK brand Marmite, a spreadable and edible yeast extract, will know what I am referring to. The product, an acquired taste for a discerning palate, sharply divides consumer opinion. However, instead of avoiding this controversy, the manufacturer has actively courted it through marketing and advertising. The distinct difference here is that a widely known and publicly acknowledged fact about the product is being commercially exploited. The Ratner case implied something that, even if widely known, was certainly not publicly acknowledged. The error of Gerald Ratner is not that of commission (ie: discrediting his own product) it is of omission (ie: failing to take his customers into his confidence before doing so).

5. Build a firewall around your brand

One of the things that struck me about the comments made by Gerald Ratner is that they were from prepared remarks and not delivered off the cuff. A prepared statement implies that time was given to its content and construction, which is actually quite baffling because one wonders where was the due diligence? Who checked and signed it off? If ever evidence were needed, the Ratner case highlights the fact that organisational seniority does not equate to a monopoly on good judgement. In a healthy organisation, there are appropriate ‘firewalls’ in place to protect a brand from risk. One therefore assumes that no (or insufficient) ‘firewalls’ were in place. Alternatively, they may simply have been ignored.

6. If something gets through your ‘firewall’ make sure you have a recovery plan

Whilst Gerald Ratner did bounce back, the damage to the Ratner business brand was very serious indeed. Three decades after the event, ‘doing a Ratner’ has become something of a study in the business equivalent of self-harm. In an ideal world, no business wants to find itself in a position, where it needs to rescue its brand from self-inflicted wounds. However, stuff happens and in the event that some unintended harm finds it way through your protective ‘firewall’ you need to have a fallback plan. Quick and decisive action, as early as possible can prevent a growing crisis from engulfing and consuming an organisation,

7. Own your error and do it quickly

I have always believed that humility in the face of failure and even ridicule is evidence of courage and courage is a high value character trait. Owning error does not mean allowing yourself to be buried by your failings. It simply means taking responsibility for things that have gone wrong and using the lessons you have learnt to put things right. Over the years Ratner has indeed ‘fessed up’, taken full responsibility and even poked fun at himself for his foot-in-mouth moment. To his great credit, Ratner has recovered and is once again trading successfully in the jewellery industry, albeit under a different brand name.

In conclusion, the fact that a simple four letter word could destroy a brand and bring a long established business to its knees seems absurdly disproportionate. But that is exactly what happened. As this blog clearly sets out, brands can be incredibly fragile and customers can be extremely unforgiving. Of course, for various reasons, brands receive negative press all the time. However, the aim and intention of this blog is not to help you to prepare for the unknowable, it is to help you prevent the avoidable.

Paul Aladenika