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Facing the Impossible: Systematizing Brand Management – Part 1
Late last week James wrote a post called Moving from Installation to Deployment, where he laid out a framework for thinking how technology moves throughout history and where our modern age fits into the puzzle. As part of his post he introduced some ideas from an economist named Carlota Perez, who argues that each technological revolution (of which we’re in our fifth) follows a similar pattern of installation, where we essentially lay out the new technology in the form of infrastructure, followed by deployment, where we finally get a chance to build upon that infrastructure and realize its value.
I’m going to pick things up where he left off, as I try to answer the question of how marketing will evolve in the age of deployment. Before I jump into the information age, though, I want to rewind back to the beginning of the last deployment age to give some historical context. The time is the early 1940s and America is just starting to exit the Great Depression. The installation phase had laid the groundwork for mass production with the assembly line, mass communication with radio and television, and mass distribution with the introduction of trucking. Those, in turn, drove explosions in income, products, channels, and the complexity of organizations (amongst other things).
In response to these changes, companies introduced new organizational approaches from R&D departments, to GM’s division structure, to P&G’s market research discipline, and finally, to brand management, a new way to organize and operate an organization centered around the company’s brands. Introduced in 1931, brand management took the next ten years to really get its legs and start to spread outside Cincinnati to many of the largest organizations in America.
The point of all this is to say that in the deployment phase of the of the electric age, the changes in technology ultimately led to innovations in the strategic approaches and operations of marketing. Ultimately those new strategies and operations drove the need for a new, integrated, function which Procter & Gamble dubbed brand management. Brand management, for all intents and purposes, was the system of record for the first generation of marketing.
Now we fast forward to today. Instead of the assembly line, radio, and cars/trucks, we have hardware, software, and the internet. Each, in turn, drives mass changes that again drive huge growth in incomes, products, channels, and the complexity of organizations. In case you don’t believe it, check out some of the order of magnitude shifts (that’s when you add a zero to something, from 10 to 100 to 1,000 and so on) we’ve seen in these categories over the last thirty years:
- Income: In 1980 the average Chinese person had a disposable income of $280. Today that number is $3,000 and growing:
- Products: Some thirty years ago the average grocery store had around 5,000 products. Today the average is over 50,000. (Source: “The Evolution of the Supermarket Industry: From A&P to Wal-Mart” by Paul B. Ellickson)
- Channels: There’s a number of ways to cut this one and each one shows near infinite growth. The simplest way to understand it is to look at the smartphone market, which didn’t exist 20 years ago and by 2020 we expect 6 billion smartphones to be in market.
- Complexity of organizations: Again, lots of ways to quantify this, whether you want to talk about people, or emails, or departments, but a simple metric is that in 1970 there were 7,000 multinational corporations and today there are 80,000.
All of these changes have led to shifts in the way large companies and the marketing departments in them function, from distributed global orgs and the growth of specialist agencies (and agency rosters generally) to the growth of category management and the integrated marketing communication process.
The question is what should this generation’s system of record be? How are we going to change the way the marketing org operates to best deal with these new realities just as Procter & Gamble did some 80 years ago?
To answer that question let’s turn our view back to P&G and try to understand what they were trying to accomplish in introducing the brand management discipline in the first place. As Rising Tide: Lessons from 165 Years of Brand Building at Procter & Gamble points out:
P&G recognized that building brands is not exclusively or even primarily a marketing activity. Rather it is a systems problem.
This is fundamental. When you’re dealing with a huge amount of change and complexity, as tempting as it is to answer the question with a one off solution, the systemic path is always more powerful. This is where we have to start in solving the challenge of rethinking marketing for this new age.
In Part Two I explore how and why brand management was implemented and what we can learn from it in building a new system of record for marketing today.