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Home / Analysis / The decline, and revival, of a brand, writes Kapil Sibal

The decline, and revival, of a brand, writes Kapil Sibal

Listen to stakeholders, invest wisely in products, have a dynamic board, appoint a 24x7 CEO

analysis Updated: Aug 03, 2020 22:09 IST
Kapil Sibal
Kapil Sibal
The CEO must know the art of managing contradictions and be aware of brewing obstacles requiring resolution
The CEO must know the art of managing contradictions and be aware of brewing obstacles requiring resolution(Shutterstock)

Brands have the potential to create immense value for companies. A large public limited company, cherished by its shareholders, cannot afford to lose its brand value. Tatas, despite the rough and tumble of the corporate world, still enjoy the trust of stakeholders associated with their many enterprises. There are other companies that had a meteoric rise and have a significant brand value. Many other relatively young corporate entities have, in a short span, in a highly competitive environment, developed brand values to be reckoned with.

The management of a large public corporation committed to growth, with a huge shareholder base, has to deal with a host of complex issues. This requires the management to listen to the voice of its shareholders — a vital input for the corporation’s strategy, operations and growth. An individual shareholder will seldom have direct access to top managers; yet, systems must be put in place, ensuring that they are heard, their opinion sought, analysed and acted upon when necessary in the larger interests of the corporation. Shareholders, who have a large chunk of shares and whose voice even otherwise matters, will have greater weight than others. Their viewpoint may well be different from those who are managing the affairs of the corporation. To continue to enjoy their confidence, the corporation’s processes and decision-making must be transparent, pursuant to a broad-based consultative mechanism. That gives confidence to both shareholders and other stakeholders who root for the success of the company’s various enterprises.

The second most important strategic element necessary for the company’s growth path is its ability to ensure that its quality products are pushed to increase their market share. Different products, which attract multifarious consumers in a diverse marketplace, need to be individually assessed for their value. A product in which the consumer has shown little interest must be discontinued and in time after the inventory runs out be replaced by a quality product. Attempts to continue with products with diminishing returns only add to the losses of the corporation. Every product which has a significant market share, therefore, must be gainfully advertised. In other words, products that sell and have the potential of increasing their market share must be encouraged and no investments should be made in products that are unlikely to attract consumers. It is, therefore, necessary that before thinking of launching a product, an in-depth market survey be done and an assessment made of its potential appeal to consumers in the context of a competitive market. Shareholders start losing confidence and offload their shares when they find that the corporation is launching products that have little value, both in terms of quality and durability. To test the waters to ascertain consumer interest for ongoing and new products, an objective market survey must be done. Without identifying the targeted market, consumers and competing brands, any investment in the product will be a complete loss.

The third strategic element necessary is to have a dynamic Board of Directors (BOD) where the Chief Operating Officer has the confidence of all. BOD, too, must consist of highly regarded individuals, each one of whom brings to the board their niche expertise and experience, adding value to the deliberations. This is of utmost importance. Expertise and experience at the level of management cater to informed corporate decision-making. BOD should collectively decide all matters, keeping in mind our diverse and highly competitive market place. The objective, of course, is to increase the footprint of the corporation, bring on board valued shareholders and increase the brand value of products sold to fuel growth. It is an established fact that a Board that functions as a team positively impacts the profitability of a corporation, allowing for dividends to be distributed among shareholders.

No corporate strategy is complete without research and innovation. The launch of new products to meet ever-changing consumer demands keeps shareholder interest alive. Young blood must be injected into BOD to keep abreast of changing market proclivities. Experience, expertise and youth with talent should occupy top managerial slots.

Autocratic managements are sustainable only in the short-term. Managements that hoodwink the consumer ultimately lose their sheen. CEOs making misleading public statements, especially when false data is advertised with intent to induce the consumer to buy products, end up destroying the credibility of the corporate entity. Managements that have a non-deliberative captive BOD, which is manipulated to endorse all the decisions of CEO, are also destined to oblivion.

It is imperative that BOD with an articulate, enlightened, efficient and dynamic CEO is grounded in reality. The Board Members and CEO must have a sense of the market place, be cognisant of the concerns and aspirations of shareholders. They must have the capacity to reach out to all significant stakeholders whose voice matters. They must have the ability to listen and persuade. Most important of all, they, and, more particularly, CEO must be adept at the art of managing contradictions and cognisant of brewing obstacles and crises requiring quick resolution. Running a large enterprise is a 24x7 commitment, which means that apart from managing contradictions, CEO must be constantly vigilant and be on the job at all times. That is the only way for public corporations to both survive and sustain their brand equity.

Sans this, the decline of the brand value of a respected corporate enterprise may be slow, but certain. This dynamic equally applies to all unincorporated enterprises.

Kapil Sibal is a former Union Cabinet minister and senior Congress leader
The views expressed are personal
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