As recent events at News Corp have shown values, or the lack of them, play an important role in how a company is run. By values I am not referring to those that have been manufactured in order to provide a solution to a problem or rolled out because the research shows that they will improve the brand image.

The values I’m referring to are neither transitory nor disposable. They are authentic, ingrained, part of the woodwork, for the most part invisible, the very air we breathe. The driving force behind the brand, these are the values that provide a sense of direction and overarching purpose, which helps further differentiate the brand from its competitors.

The outdoor clothing company Howies, and Lush cosmetics, have each used their core values to create two very distinctive brand strategies based around their common stance of providing ‘eco’ friendly products. Howies make clothes from natural materials that are designed to last.  Lush cosmetics are made from natural ingredients and come with little or no wrapping.  The expression of these values – Howies hand me down campaign and Lush retail outlets that look like grocery stores – differentiates both brands from their competitors.

Brands that do not have a ‘values driven’ agenda or are happy to go along with the flavour of the month struggle to develop their own distinctive voice. Adopting a ‘me too’ approach and with it a certain blandness customers are far more likely to find these brands difficult to distinguish from the competition.

In a market place that is overcrowded and where price and quality are no longer guaranteed to distinguish one product or service from another customers are increasingly looking for brands whose values and social outlook is in line with their own – aspired or otherwise.

An increasingly important part of the purchasing mix values provide sticky brands with a social status and with that status a language, which further defines and differentiates the brand.

Ben and Jerry’s ice-cream with ‘its gobs of chocolate chip cookie dough’ is in keeping with the company’s status as a ‘brand of the people.’ This language, which is quite different from that used by Häagen-Dazs, is underpinned by the founders commitment to social justice for everyone. Ben and Jerry’s ‘it’s not fair’ campaign is  simply one more expression of this core value. As with all sticky brands Ben and Jerry’s communication never deviates from delivering its core values.

As well as being able to project a single well-focused message that has provenance, value driven brands have one other distinct advantage over those companies who are content to lead purely on product or service benefits.

While the latter look for people who are qualified, value driven brands look for those who share their values. Having a natural affinity with the product, service or/and underlying ethos of the company they are far more likely to represent the brand in a good light. By insisting that all their employees have a strong sporting background Oakley are ensuring that every department is the sales department.

Walking into a bookstore where the staff are interested in books and walking into one where they are not lends itself to two quite different shopping experiences. In the first the experience is friendly and embracing in the other you are likely to get the impression that they couldn’t care less not just about books; but about you.  Not the sort of experience that lends itself to creating a sticky brand.

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A few years ago I was involved in some research for a shoe manufacturer. The brand had a reputation for being sensible, hard wearing and comfortable.

They wanted to launch a new range of shoes; ones their customers would buy because they were stylish and sexy. Like most companies they wanted a slice of a market that until now had eluded them.

The company had the designers, the technology, the financial muscle and the distribution network to achieve their ambition – they were global players.  What soon became apparent was that their values reflect their Nordic sensibilities. These values were collective not individualistic, solid rather than overtly sexy and erred on sensible. In other words what they didn’t have were stylish, sexy values.

In order for that company to produce shoes that were inherently sexy and stylish they’d have to step away from their existing cultural values and adopt a culture and a set of values that was inherently alien to them. That wasn’t going to happen.

Over the last six or eight years I’ve seen and in some cases been involved with research initiatives in which global brands have invested significant amounts of money and time to break into markets which are alien to the brands’ core values.

The pickings look rich – irresistibly so and besides if you don’t do it someone else will. In the rush to stay on top and take advantage of the next biggest thing brand values are often ignored or worse reinvented.

It’s as if Harley Davidson had decided to get into the moped market.  Sounds outrageous but what about Porches foray in the 4×4 market?  Or Hummer moving into the luxury car market? Whilst it is possible to mine those profits in the short term the damage done to the brand in the long term is likely to outweigh any opportunistic short term gains. Growing a business at the expense of the brand can be costly in the long run.

Successful brand stretch is not so much linked to the product – we do toothpaste therefore we can do toothbrushes, mouthwash, chewing gum – but to the core values that define the brand territory. Stepping away from those core values confuses customers, muddies the brand message and ultimately damages the brand premium.

Brands that have been successful in moving from one territory to another have always remained true to their core values.  Lucozade’s move from being a drink you gave to kids who were feeling under the weather to one consumed by athletes was in keeping with its core values around health.  Marks and Spencer where able to reinvigorate the brand by going back to its core values of innovation married to value and quality.

Those brands that ignore their own brand heritage and the values that go with that heritage invariably end up looking like the proverbial ugly sister.

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In an interview following the Conservative Party conference, notable for its cats and bags, I was struck by the PM’s answer when questioned by Jon Snow on the economy. When asked if he, David Cameron, had ever suffered economic hardship himself, the PM referred to his current job and the fact that he was well paid and privileged to do this job.

The question was of course directed at Mr Cameron’s past and his privileged background not his current state of employment. That the PM chose to deftly sidestep the question is telling for two reasons. Firstly it shows us that, like most politicians, the PM is a master of the foxtrot.

Secondly, party politics and dancing aside, it tells us that the conservatives are aware of a potential flaw in the brand Cameron, one that is destined to play an increasingly important role in the party’s ability to deliver a powerful message on the economy.

The conservative’s have chosen to base their economic campaign strategy on austerity, the strap-line ‘We are all in it together’ underscores the message and adds that all important call to action. This key message is in keeping with the conservative brand values which are traditional and lend themselves to a good old fashioned bit of  patriotism; not a bad card to play when times get tough. So far so good.

But is Cameron a believable candidate to deliver this particular strategy? As an old Etonian and member of the Bullingdon Club (ah cruel fate) the answer is probably not. Cameron lacks the provenance to deliver a message that would have him be seen as one of the boys, down in the trenches… ‘austerity let me tell you about austerity my family lived in a… but of course they didn’t and he isn’t. And that’s a problem.

Brands like Johnnie Cupcakes (covered in last months newsletter) go to considerable lengths to ensure that the founder’s story is in keeping with the brands values and the products it delivers. Richard Branson rarely if ever misses the opportunity to show that he, like the brand, (which he is) is youthful adventurous and aspirational. Unlike Branson’s or Johnnie Earle’s past Cameron’s is off limits to the strategists.

When Reebok stepped away from its aerobic heartland to take on Nike’s prowess in the track and field market it failed to win not because it’s products were in anyway inferior to that of its competitor or that it lacked the financial muscle and will power to compete but because it lacked provenance. Ask people what they associate Reebok with and most will say aerobics ask them about Nike and most will say track and field. Who would you buy a pair of running shoes from?

A brand whose strategy and message is not aligned with its history, and the actions that make up that history, is one that will at best lack punch and worst be seen as a fraud.

Why do the polls show Cameron as a lightweight and not really up to the job? Answer: he lacks the provenance to deliver the party’s strategy on austerity. Cameron knows this and so do the strategists which is why he is keen to side step the issue and move the conversation elsewhere.

As is the case with all brands the issue is not what is being said, or even how it is being said, but our (the customers) perception of who is saying it. Consciously or unconsciously voters will always ask the question, do they have the provenance, do we believe them? The famous Monty Python sketch uses this gap between the sayer and what is being said to great comic effect finishing with the punch line, ‘and you try and tell the young people of today that and they won’t believe you.’

Margaret Thatcher could deliver messages about free enterprise and social mobility with power because she was a grocers daughter. When George Bush senior, an east coast wasp, hit the campaign trail he donned a Stetson and a Texan accent. While the rest of us are striving to be upwardly mobile those seeking high office are striving to be downwardly mobile. It’s a funny old world.

For a variety of reasons that go beyond the point of this article many European politicians are increasingly looking out of step with their voters. Thanks to a combination of education and geography, European politicians, will at least for the seeable future, find it much harder to reach for the equivalent of a Stetson and Texan accent.

If Cameron could lay a historical claim to austerity I’m sure he would. But as it stands the current Conservative brand communications strategy is doomed to look more like a sticky wicket than a sticky brand. A grocers daughter he ain’t.

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Kweku Adoboli It's always the ones you least suspect

Anyone who is in any doubt as to the power of values and the extent to which they drive a business and its financial outcomes need look no further than UBS. The latest ‘rogue’ trader to run up losses of £1.3 billion is a junior who rose up the ranks from the back office-trading floor.

UBS are not the only bank or company to be blighted by rogue syndrome. In the last year and a half we have had rogue reporters, rogue MP’s, and rogue policemen. In each case there has been a call for stricter regulations, more checks and balances more transparency. Historically these measures have a poor track record treating as they do the symptoms rather than the cause.

UBS who has a history of rogue traders, dating back to at least 1998, had according to their latest press release put in stringent safeguards to prevent such a thing ever happening again. Interestingly the only difference between UBS’s 1998 losses and those incurred  in 2011 is the amount which is three times larger than that lost in 1998.

In the game of Monopoly that is investment banking the win lose stakes are high. Those that are prepared to take the risks can expect to pick up their own slice of Mayfair. Those that gamble and lose don’t pass go, don’t collect their £200 and risk going straight to jail.

Risk, the core value that drives this carrot and stick game has created an American ‘frat’ house culture. The basic entry level requirement for ‘frat’ members is the willingness and the ‘balls’ to take risks.  As part of this rite of passage new members can also expect to undergo a series of hazing (harassment) rituals from other more seasoned members of the club.

The real power of these value driven cultures lies not in their financial rewards, which is the icing on the cake, but in the fraternity they create, frat coming from the Greek ‘frater’ which means brother. The club’s uncompromising rules to entry are designed to foster feelings of privilege and belonging. Once inside there are some clear, if unspoken guidelines, on how to improve your standing.

Junior members more than anyone else are required to prove they have the balls to embrace the company’s risk taking culture. The more able they are to effectively embrace that culture, the bigger their balls, the more power they can exert. The more power you can exert the safer you are. Ironically for those traders working in investment banking safety comes from taking ever-greater risks.

The value driven cultures that epitomize those found in investment banking are inward looking. The ability to accumulate the all important cultural trophies of money and status, are what really counts. Loyalty is to the group anything that might threaten the group becomes the enemy.

How effective will new legislation, increased safety checks and balances be in curbing the excessive risk taking and the hazing that helps to perpetuate it? If the same legislation that was used to ban the excessive hazing techniques in frat houses in the states is anything to go by, not very effective at all. Frat houses have longevity and resistance to change built into their DNA.

The UBS PR machine would have us believe that Kweku Adoboli, the junior trader at the centre of the latest UBS debacle, is a bad apple, a rogue trader that slipped through the net. The reality is that most rogue traders are not unprincipled outcasts  waiting for the chance to buck the system, they are the system.

I don’t think anyone would argue that it takes a certain kind of balls to rack up £1.3 billion in loses. Unfortunately for Kweku Adoboli the only balls he’s likely to be carrying around for the forceable future will be those attached to his ankles.

On the bright side a stretch in goal might give him plenty of time to reflect on the values that have lead to his demise. We can only hope those companies and organisations who have been effected by rogue syndrome will do the same.  If the UBS track record is anything to go by I wouldn’t bank on it.

The Telegraph

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