Towards a better understanding of the corporate brand as a strategic resource

partnership the Audi CEO was quickly convinced and agreed to pursue a collaboration with B&O – redeemed by an unambiguous and to the point German rhetoric: ‘Das machen wir!’

(Let’s make this!).

Ever since the first launch in 2005, the B&O Automotive business has experienced

tremendous growth to include a customer portfolio now comprising highly esteemed brands such as Aston Martin, BMW and Mercedes in addition to Audi. Today, B&O Automotive accounts for a substantial part of the B&O group’s aggregated turnover. Powered by the corporate brand vision, this case was a vindication for B&O of the price premium strategy and the power of sustainable brand-based innovation leading to massive market success and numerous awards since 2006 for the best brand in the in-car stereo category (Bang and Olufsen website, 2011b) building and nurturing the intended B&O brand image of a highly innovate brand with a distinct attitude towards designing magical experiences (Bang and Olufsen website, 2011c).

6.7. Towards a better understanding of the corporate brand as a strategic

moving towards new ways of communicating ultimately. As Mr Zinck (Interview, Jens Peter Zinck, 18 November 2009), Managing Director of the Serene project, explained, there was a consensus across the management layers that venturing into the mobile market was the right thing to do at that point in time. The decline in B&O’s landline phone business made the growing market for mobile phones a logic area for development in order to continue generating revenues in the telephone category.

Looking back at the reasons for the decision to enter the mobile phone market, it seemed only rational to do so, at least from a market orientation perspective (Narver and Slater, 1990). However, had the management demonstrated a stronger situational intelligence they may have avoided this costly investment and its knock on effects onto the B&O brand. The lesson to be learned, however, is that if what the customers are demanding lies beyond the scope of your brand’s resources, capabilities or simply does not fit within the boundaries of the corporate brand platform (Urde, 1999), then exercising true brand leadership may entail disregarding the market, and instead make the investments necessary to ensure customer value creation and brand deliveries in new market spaces that truly align with the brand platform (Helm and Jones, 2010). Finally, customer insights focused on eliciting core product and brand meaning through explorative and exploitative strategies need to be central to brand decision-making (Verganti, 2009). The missing design-usability dimension of the product illustrates the imperative of thinking human and showing how a lack of a humanistic market orientation may ultimately lead to unfavourable product usability. The key learnings to be drawn from this business case are that an overreliance on the exploitation of market data should be balanced by the application of explorative strategies that more fully consider the future market. Moreover, failing to think resourceful, that is, to consider the resources needed long term to stay at par with the rapid development in the market, made it impossible to stay competitive and deliver the B&O performance – a key element in justifying a price premium.

Thus, although supported by the B&O corporate vision stressing an innovative and explorative approach to business activities, it seems that the part stating ‘long-lasting experiences’ was not properly attuned to the project illustrating the risk of brand vision misinterpretation. Finally, it seemed that a lack of holistic design thinking bringing together and aligning the SBBI imperatives of thinking brand, thinking human and thinking

resourceful resulted in an improper balance between resource exploitation and market exploration (March, 1991; Martin, 2009), illustrating why the design thinking imperative of integrative thinking (Brown, 2008) to enhance the business viability of innovation projects is vital to the equation of sustainable brand-based innovation.

6.7.1. B&O Automotive: A successful case of Sustainable Brand-Based Innovation

B&O had much greater success with the idea of stretching the brand into the automotive industry and as we shall demonstrate this case represents a sustainable brand-based

innovation. First, the B&O management team strongly believed in the brand as a resource to be exploited for its competitive positioning, image and reputation. On the basis of their unrelenting belief in the corporate brand, they targeted high-end car brands capable of

launching sound systems priced six times higher than the closest competitor: American Bose.

However, besides acting as a door opener owing to the clear co-branding benefits that the business proposition represented, the B&O management let the brand play out a much more crucial role as the brand vision encouraged abductive reasoning: ‘…it helped us justify that we kept on going forward with the project despite of the absent results to start with’, as explained by Mr Zinck (Interview, Jens Peter Zinck, 9 December 2009). However, in many cases, especially in a business-to-business context, pure belief is not always going to be enough (especially for co-branding partners) and a market analysis was therefore carried out.

This created a more balanced approach between the management’s vision of ‘what might be’

and ‘what the market actually can tell us’, thus placing the automotive management’s development practice in the schism between exploitative and explorative strategies (March, 1991). This then led to the all-important decision to make the first product prototype

integrated into a genuine Audi vehicle, portraying the capabilities and resources present in the B&O organisation to deliver as promised. This prototype process and on-going market data inquiries helped validate the management’s intuitive hunch of the project’s viability, thus corroborating the logic of abductive reasoning (Martin, 2009). Significantly, from a resource perspective, the in-car sound stereo market did not require more financial resources than the B&O Group could master in terms of future incremental updates. Contrary to the cost of constantly producing software updates, as in the case of operating in the mobile phone industry, the sustainability of this innovation rested on designing and producing sound

systems built on proprietary acoustic technologies and engineering and design capabilities present in B&O. Thus, exercising brand leadership – making decisions in support of the corporate brand platform – must include considerations to whether the longevity of innovation investments are viable to truly capitalise on the investments and increase shareholder value. This situational intelligence with regard to a great awareness of the corporate brand’s core customers’ lives and unarticulated desires shows how thinking brand served as an inspiration for market-shaping innovation and a management decision-making heuristic, enabling the management to make the logical leap from an initially questioning of how to innovate to better serve the brand’s customers to actually moving forward to actions that support and strengthen the corporate brand.

This human approach allowed the corporate brand vision to play a crucial role of guiding an abductive management reasoning and decision-making. Finally, bringing together the three imperatives of the SBBI framework, this new business innovation was aligned with the

resources and capabilities within the range of the B&O organisation long term. The

sustainable aspect of this business case was thus found in the strategic link to the core brand promise, which for B&O focused on the ability to deliver high-quality and long-lasting experiences.

As illustrated in the intersection of the SBBI model’s three imperatives, the ability to balance reasoning between logical leaps and reliable market data is to be viewed as the mindset and managerial practice preventing managers of either ending up seeking only variance within the present structures or ‘heedlessly’ exploring new markets without any considerations of the long-term implications of implementation. Thus, the notion of design thinking acts as the backbone of our framework and is simply a key imperative in letting the brand vision and possibilities vested in the brand values and competitive positioning drive an explorative market approach.