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Are the Strategic Stars Aligned
for Your Corporate Brand?
by Mary Jo Hatch and Majken Schultz
Reprint r0102k
2
Copyright © 2001 Harvard Business School Publishing Corporation. All rights reserved.
ILLUSTRATION BY TOM SAECKER
marketing notion that each product
needs a unique identity. Ideally, a brand
would grow so strong that, like P&G’s
own Pampers, it would become a syn-
onym for the product itself.
If the image on the P&G brochure
does imply a shift in direction, the com-
pany will be joining the ranks of corpo-
rate branding giants like Disney, Micro-
soft, and Sony. Rather than spend their
marketing dollars on branding individ-
ual products, those companies promote
a corporate brand– a single umbrella
image that casts one glow over a pano-
february 2001
3
by Mary Jo Hatch and Majken Schultz
Tool Kit
W
hen Procter & Gamble
sponsored the Juvenile Diabetes
Foundation in New York last year, the
company distributed the customary
glossy promotional brochure to high-
light its generosity.That brochure,how-
ever, looked different than those from
years past. On the cover, 20 of P&G’s
flagship products were conspicuously
merged in a single symbolic image.
For the granddaddy of product brand-
ing, that image may very well reflect a
seismic shift in marketing strategy. P&G
was founded,after all,on the traditional
Companies are increasingly seeing the benefit of a
corporate branding strategy. But to get the most out
of such an approach, three essential elements must
be aligned: vision, culture, and image. Are yours?
Are the Strategic Stars
Aligned
for Your
Corporate Brand?
ply of products. In recent years, corpo-
rate brands have become enormously
valuable assets–companies with strong
corporate brands can have market val-
ues that are more than twice their book
values. (For more on the business case
supporting corporate brands, see the
sidebar “What a Corporate Brand Can
Do for You.”)
Not surprisingly, creating a corporate
brand is both complicated and nuanced.
Perhaps that’s why so many companies
get it wrong. In some cases, an organiza-
tion will invent a catchy new corporate
slogan, tack it on a wide range of prod-
ucts, and hope it will mean something
to employees and consumers alike. Just
as bad, a company might simply design
a new logo and slap it on every product,
hoping it will pass as a corporate brand.
But there is more to it than that. Our
research into 100 companies around the
world over ten years shows that a com-
pany must align three essential, inter-
dependent elements –call them strate-
gic stars– to create a strong corporate
brand: vision, culture,and image. As op-
posed to the shortcuts described above,
aligning the stars takes concentrated
managerial skill and will. The reason
is that a different constituency– man-
agement, employees, or stakeholders–
drives each element. Consider:
• Vision: top management’s aspirations
for the company.
• Culture: the organization’s values, be-
haviors, and attitudes – that is, the way
employees all through the ranks feel
about the company.
• Image: the outside world’s overall im-
pression of the company. This includes
all stakeholders – customers, share-
holders, the media, the general public,
and so on.
The Corporate Branding
Tool Kit
To effectively build a corporate brand,
executives need to identify where their
strategic stars fall out of line. To guide
managers through this analysis,we have
developed the corporate branding tool
kit, a series of diagnostic questions de-
signed to reveal misalignments in cor-
porate vision, culture, and image. The
first set of questions looks at the rela-
tionship between vision and culture;
that is, how managers and employees
are aligned. The second set addresses
culture and image, uncovering possible
gaps between the attitudes of employ-
ees and the perceptions of the outside
world. The last set explores the vision-
image gap– is management taking the
company in a direction that its stake-
holders support?
To get started, take a look at the ex-
hibit “The Corporate Branding Tool Kit.”
The questions are relatively straight-
forward, but the investigation itself can
be complex and time-consuming. Cull-
ing all the relevant information from
your top managers, employees, and key
stakeholders – through interviews, focus
groups, interactive Web sites, and so on–
can take months,or even a year or more.
Throughout the process, you’re trying
to detect misalignments between stra-
tegic vision, organizational culture, and
stakeholder images – even small gaps
that might grow into larger ones.
Aligning the elements of your corpo-
rate brand is not a sequential process.
Vision, culture,and image are intricately
interwoven, and you need to conduct
the gap analyses concurrently. As you
examine the relationship between, say,
vision and image or image and culture,
there will be some overlap. Don’t worry.
This is the natural result of the interde-
pendence of the elements.
The tool is useful in identifying the
key problem areas –the vision-culture
gap, the image-culture gap, and the
image-vision gap – but the hard work of
developing specific solutions and im-
plementing them belongs to you and
your team.
The Vision-Culture Gap. This mis-
alignment develops when senior man-
agement moves the company in a stra-
tegic direction that employees don’t
understand or support. The gap usually
emerges when senior management es-
tablishes a vision that is too ambitious
for the organization to implement. The
main symptom: a breach between rhet-
oric and reality.Disappointed managers
often blame employees for resisting
change; frustrated employees react with
cynicism and suspicion. Such scape-
goating and distrust are extremely dan-
gerous for companies.Like an ulcer, they
can eat away at a corporate brand from
within. To uncover possible gaps be-
tween vision and culture, managers
should ask the following questions of
themselves and their employees:
Does your company practice the values
it promotes? We all laugh at Dilbert car-
toons. But a company where every cu-
bicle is festooned with them is probably
in deep trouble. The cartoons use cyni-
cal humor to point out the discrepancies
between the values a company espouses
and those that its systems promote.This
isn’t a laughing matter. During John
Akers’s reign at IBM, for example,a joke
circulated throughout the company that
“IBM means I’ve been misled.” The
severe downsizing that took place in the
early 1990s in spite of the company’s
promises of lifelong employment had
generated anxiety, depression, and fear
among its employees. Needless to say,
the effect of such disillusionment on
IBM’s brand at the time was devastating.
Does your company’s vision inspire all
its subcultures? Any company, large or
small, is made up of subcultures. The
engineers in your R&D department will
have a different set of values and prior-
ities than those held by the sales and
marketing department. Top managers
need to be sure that the vision that
inspires them – they, too, have a subcul-
ture–will resonate throughout the com-
pany. A vision that speaks only to the
R&D staff will not inspire a company
that is dependent on salespeople. The
key is to understand what organiza-
tional values are shared across the com-
pany. Successful corporate visions pick
up on those shared values. Bang &
Olufsen, the Danish audiovisual com-
pany known for its distinctive product
designs,for instance, unifies its disparate
workforce around a Bauhaus-inspired
tradition of simplicity.
4
harvard business review
TOOL KIT • Corporate Brands
Mary Jo Hatch is a professor at the McIn-
tire School of Commerce at the University
of Virginia in Charlottesville. Majken
Schultz is a professor at the Copenhagen
Business School in Denmark.
february 2001
5
Corporate Brands
• TOOL KIT
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Vision
(managers)
Image
(stakeholders)
Culture
(employees)
Does your company practice
the values it promotes?
Does your company’s vision
inspire all its subcultures?
Are your vision and culture
differentiated from those of
your competitors?
Who are your stakeholders?
What do your stakeholders want
from your company?
Are you effectively
communicating your vision
to your stakeholders?
What images do stakeholders
associate with your company?
In what ways do your employees
and stakeholders interact?
Do your employees care what
stakeholders think of the company?
The Corporate Branding Tool Kit
Silicon Valley legions of young people
who equated Apple with a new way of
life. These computer enthusiasts not
only created a culture that supported
Apple as it grew but also altered the
shape of the computer industry forever.
The Image-Culture Gap. Misalign-
ment between a company’s image and
organizational culture leads to confu-
sion among customers about what a
company stands for. This usually means
that a company doesn’t practice what it
Are your vision and culture sufficiently
differentiated from those of your com-
petitors? Your vision and culture are
your signature. Together, they are a
powerful tool in helping you stand out
from your competition. Apple is a clas-
sic example of a company that success-
fully differentiated its vision through its
unique culture. Thanks to Steve Jobs,
Apple saw the potential of computers to
change people’s everyday lives. Jobs’s
insight and enthusiasm attracted to
To get the most out of a corporate
branding strategy, three essential
elements must be aligned: vision,
culture, and image. Aligning these
“strategic stars” takes concentrated
managerial skill and will. Each element
is driven by a different constituency:
Vision
Top management’s
aspirations for the
company.
Culture
The organization’s values,
behaviors, and attitudes –
that is, the way employees
all through the ranks feel
about the company they
are working for.
Image
The outside world’s overall
impression of the company.
This includes all stakeholders –
customers, shareholders, the
media, the general public, and
so on.
preaches, so its image gets tarnished
among key stakeholders. In today’s
wired world, where word-of-mouth
opinion spreads through Internet chat
rooms as quickly as the flu through a
kindergarten, maintaining a positive
image is increasingly challenging. To
identify image-culture gaps, you need
to compare what your employees are
saying with what your customers and
other stakeholders are saying.
What images do stakeholders associate
with your company? The first step in un-
covering an image-culture gap is to
understand the images that outsiders
have of you. These images are both real
and perceived –they stem as much from
an individual’s feelings, thoughts, and
opinions as from the facts of your
company. They can be startlingly dif-
ferent, therefore, from the image that
the company seeks to project. And when
stakeholders find that the culture of an
organization does not match their sub-
jective image, it often spells disaster for
the company. Consider British Airways.
When it decided to go global, BA
launched a campaign to change the
image of the airline. The company used
advertising to persuade the public to
view BA as a global airline; “the world’s
favorite airline”was now “the world’s fa-
vorite airline.” To communicate its new
image, BA repainted the tail fins of its
aircraft with artwork from around the
world. Unfortunately, the prim uni-
forms of the cabin crew and the silver
tea service continued to give passengers
the impression that BA was distinctly
British. Caught in the chasm between
image and culture, BA’s branding ex-
periment failed.
In what ways do your employees and
stakeholders interact? The next line of
questioning focuses on the channels
through which a company reaches out
to stakeholders. While advertising and
public relations can counter negative
images, nothing is more powerful than
stakeholders’ direct, personal encoun-
ters with the organization.Energy giant
Shell, for example, not only listens to its
customers but also seeks feedback from
investors, community members, and
activists through focus groups, surveys,
and its Web-based “Tell-Shell”program.
Unfortunately, many companies put
obstacles in the way of such communi-
cations, to the detriment of their corpo-
rate brands. Consider the potential for
misalignment when marketing talks to
customers, HR talks to employees, pub-
lic relations talks to the media, but the
departments don’t talk to one another.
Do your employees care what stake-
holders think of the company? An inau-
thentic organizational culture can jeop-
ardize a corporate brand. Take Coca-Cola,
which used to have one of the world’s
most powerful corporate brands. Recent
events – including the distribution of
tainted beverages in Belgium and al-
leged profiteering among distributors –
have led to a gap between the com-
pany’s culture and image. How could
the employees of the company that
“taught the world to sing” be a party
to the exploitation of its customers?
This fundamental misalignment has
tarnished the image of Coca-Cola. The
company must now work to correct
the deterioration in its culture that led
to the scandals.
The Image-Vision Gap.The third ob-
stacle for creating an effective corpo-
rate brand is conflict between outsiders’
images and management’s strategic vi-
sion. Companies cannot afford to ignore
their stakeholders; the most carefully
crafted strategic visions will fail if they
are not aligned with what customers
want from the company.Having sounded
out employees and stakeholders, man-
agers need to find out whether they are
out of sync themselves.
Who are your stakeholders? Managers
who ask themselves this seemingly ob-
vious question are frequently surprised
by what they learn. For example, many
companies find that their products
reach a very different market from the
ones they are targeting. Consider Nike
in the mid-1980s. At the time, the com-
pany saw itself as a high-performance
athletic-shoe manufacturer that at-
tended only to the needs of top athletes.
But market research later showed that
more than half of Nike’s sales were
going to people who were wearing the
athletic footwear as a substitute for
casual shoes. This image-vision mis-
alignment meant that Nike was not cap-
italizing on an important market.
What do your stakeholders want from
your company? Just as there can be a dis-
connect between a company’s culture
and its image, so too is there frequently
a gap between management’s vision
and the images and expectations cus-
tomers have for a company. After Nike
discovered that its products were being
sold as substitutes for casual shoes, for
example, it produced a line of conven-
tional casual shoes–that nobody wanted.
Consumers wanted the same shoes their
athletic heroes were wearing. Before
the company could exploit what was
obviously a hot market, Nike had to
come to grips with the fact that it didn’t
matter that the sneakers were over-
engineered for the average customer.
The appeal was in the image of athleti-
cism that the sneakers projected.
Are you effectively communicating your
vision to your stakeholders? Marshall
McLuhan memorably said the medium
is the message. Though we wouldn’t go
that far, we have no doubt that many
companies underestimate the impor-
tance of the way they communicate
their vision to outsiders. Having created
an inspiring vision backed up with cul-
tural values,corporate managers all too
often fail to check their work with their
stakeholders. Recall British Airways.
Once it had privatized, BA decided it
was time to fully globalize its brand. In
addition to repainting the planes’ tail
fins, the company decided to remove
the British flag from all its aircraft. The
British press went ballistic. A cabin-crew
strike broke out.Business-class travelers
threatened to switch allegiance. This
time a gap had developed between BA’s
vision and its image, and executives
were forced to acknowledge they had
gotten it wrong again, and they aban-
doned the program. BA finally got the
message– it was a public icon that could
not afford to ignore its stakeholders.
The corporate brand tool kit will not
by itself identify all the problems you
are likely to have with your corporate
brand. But it does provide a useful
framework for reality testing and will
help you uncover the most obvious
gaps. You should tailor the questions to
your company and drill deeper in areas
of particular concern.It’s also helpful to
compare responses from different con-
stituencies to similar questions. For ex-
ample,you can compare how managers,
employees, and stakeholders rate the
way the company communicates its vi-
sion. A lack of consensus between the
groups– or worse, among members of
the same group –will signal an impor-
tant disconnect.
Getting the Stars Lined Up
Using a process like the corporate brand
tool kit can help companies get the most
from their corporate brands. That’s what
happened at Lego, the fourth largest
6
harvard business review
TOOL KIT • Corporate Brands
Corporate Brands • TOOL KIT
february 2001
7
toymaker in the world. For years, the
company’s top managers recognized
that Lego’s most valuable asset was its
image as a producer of imaginative and
inventive construction toys. But in the
mid-1990s, the market for the toys
started to decline, and Lego managers
knew they had to reinvent the company.
Its image was an obvious place to start.
How did Lego go about building on
its image? The first step was to find
out exactly what images stakeholders
had of the company and its products.
Lego turned to outside experts such as
Young & Rubicam, a leading advertising
agency, for a global assessment of its
image. They found that, in the minds of
its stakeholders, Lego’s image was as
strong as those of some of the world’s
most powerful players, such as Disney
and Microsoft. The revelation encour-
aged Lego executives to stop thinking of
the company in terms of products– the
celebrated Lego bricks– and dare to see
themselves as leaders in the business of
creativity and learning.
The next step in developing the cor-
porate brand was to bring vision in line
with image. This was done by holding
brainstorming sessions for top manag-
ers and people outside Lego–academics
in business strategy and child develop-
ment as well as dedicated customers–
who had long-standing relationships
with the company. Lego executives de-
liberately searched for a vision that
Creating a corporate brand – an
umbrella image that casts one glow
over an array of products – is a rela-
tively new approach to integrating
a company’s stakeholders. With the
notable exceptions we have men-
tioned, most major companies, like
P&G, have been better known for
their product brands than for their
corporate brands. But an increas-
ing number of companies are dis-
covering just how much value there
is in a strong corporate brand.
Corporate brands reduce costs.
U.S. companies together can save
billions of dollars by using corpo-
rate brands to exploit economies of
scale in advertising and marketing. SmithKline Beecham,
for example, now uses its corporate brand to support all its
products. Corporate brands make good sense for compa-
nies that compete in markets where product life cycles have
shortened, making it difficult to recover the costs of con-
tinually creating new product brands. Nestlé and Unilever
are moving in this direction, each reducing the number of
product brands they market.
They give customers a sense of community. Many cus-
tomers are willing to pay more for some badge of identifi-
cation – say, Apple’s rainbow-colored logo – that makes
them feel they are part of a community. Another notable ex-
ample is Virgin. Across the company’s diverse businesses –
airlines, megastores, cola, and mobile phones – Virgin’s top
management,led by flamboyant CEO Richard Branson,has
meticulously cultivated the distinctive positioning of David
versus Goliath: “We’re on your side against the fat cats.”
This has led to the widespread perception that Virgin is a
company with a distinctive person-
ality: innovative, challenging, fun.
They provide a seal of approval.
A strong corporate brand lets cus-
tomers know what they can expect
of the whole range of products that
a company produces. Take Sony, for
example. Its corporate logo of four
block letters, whether applied to a
stereo, a television, or a computer
game, stands for the high level of
competence, quality, and care for
detail shared by all the products that
are sold under the Sony name. A
strong corporate brand also helps
a company defend itself against
outside assault. Consider the Body
Shop. When a journalist recently accused the company of
lacking integrity in its testing of beauty products, the com-
pany overtly appealed to the public by citing its corporate
brand, which was firmly associated in people’s minds with
strong ethical standards concerning animal rights.
They create common ground. The most successful cor-
porate brands are universal and so paradoxically facilitate
differences of interpretation that appeal to different
groups. This is particularly true of corporate brands whose
symbolism is robust enough to allow people across cultures
to share symbols even when they don’t share the same
meaning.A good example is the McDonald’s golden arches.
One of the most powerful corporate brands ever created,
the golden arches resonate in the hearts and minds of peo-
ple all over the world – even though different cultures
attach different meanings to them. McDonald’s promotes
and supports these differences of interpretation, breathing
life into its corporate brand around the world.
What a Corporate Brand Can Do for You
would inspire the whole organizational
culture as well as customers and other
stakeholders. The result was a catchy
new slogan – “just imagine…” – and a
bold new vision statement. Lego vowed
to become the strongest brand among
families with children by 2005. Com-
pany owner and president Kjeld Kirk
Kristiansen held companywide semi-
nars to launch the new vision. The pro-
cess was inspirational.Lego got the guid-
ance and input it needed to create a
powerful new corporate vision that was
in keeping with the company’s image:
imagination, invention, togetherness,
learning, and, of course, fun.
But aligning two of the three stars
wasn’t enough. Lego also needed an or-
ganizational culture that could support
the vision and give the images credibil-
ity. That’s why it invited managers and
employees from all over the world to
participate in “pit stops.”At these work-
shops, which have so far involved some
7,000 employees, individuals share their
dreams for the company and them-
selves, building support for the brand
in the process. In addition, the company
organizes “dream-outs,” similar to GE’s
workouts, where employees participate
in interactive, real-time problem solv-
ing. One dream-out improved distribu-
tion channels in the United States, an-
other found new ways of responding
to customer needs for their infants. Pit
stops and dream-outs are activities that
align Lego’s culture behind the vision,
and together they have transformed the
employee mind-set from toy producers
to brand warriors.
Of course, even though it took excep-
tional care to align image, vision, and
culture, Lego faced lingering tensions
when it moved to roll out the corporate
brand. A few product brand managers
resisted the corporate brand and had to
be let go. The company itself had to re-
organize. But the transformation at
Lego was well worth the effort. Accord-
ing to Lego’s 1999 annual report, the
benefits of the corporate brand strategy
and the investments in new business
ideas and people development had al-
ready started to show in the 28% in-
crease in the company’s global net sales.
8
harvard business review
TOOL KIT • Corporate Brands
Last year, the Lego brick was named toy
of the century by Fortune magazine.The
company grabbed more honors when it
received the “Toy of the Century”award
from the British Association of Toy Re-
tailers for its classic Lego bricks and its
ability to create new inventions such as
Mindstorms.
While corporate vision and culture are
themselves powerful strategic tools,
once they are aligned with stakeholder
images,the corporate brand can become
a powerhouse.
By identifying all elements of the
corporate brand–and by exposing any
gaps in their interaction– the corporate
branding tool kit can help companies
reap the benefits of a corporate brand-
ing strategy. The tool eliminates much
of the ambiguity involved in creating
and maintaining a corporate brand. As
a result, managers can take charge of
those brands and use the strategic stars
as competitive weapons.
Reprint r0102k
To place an order, call 1-800-988-0886.
Estée Lauder has a strong corporate brand, but the company is driven by a
number of product brands, such as Origins and Mac. The Gap has three suc-
cessful product brands –Banana Republic, Old Navy, and the Gap – but many
customers are unaware that they’re all part of the same company. Are these
companies lagging behind the times? Not necessarily. Sometimes product
brands just make more sense, especially:
If you are a product incubator. If your company’s mission is to create and
then sell off successful product brands, imposing a corporate brand on them
doesn’t make sense. For example, many biotechnology and information tech-
nology companies make significant profits selling spin-off companies. This
was the case, for example, when Danish NKT sold its subsidiary, Giga, to Intel
for more than
$1 billion. Because NKT’s business model is based on selling off
other companies in the future, it holds them under separate names. In such
cases, overt corporate branding could detract from the selling price if the
potential buyers believed that disassociating the unit from its current owner’s
brand would be costly.
After M&A activity. In industries such as finance and telecommunications,
where frequent international mergers and acquisitions can affect stakeholder
comfort, many companies will choose to preserve their national brands. Take
the case of banking. After a bank is acquired, customer trust and loyalty are
unlikely to be transferred automatically to the new bank owners. That’s why
Scandinavia’s largest financial company, Nordic Baltic Holding, maintains
local brands such as MeritaNordbanken in Sweden and Finland, Unibank in
Denmark,and Christiania Bank in Norway.Maintaining national brand names,
at least in the short term, can help ease the turmoil of changing ownership.
If you are expecting fallout. Firms that like to take risks in new markets
might not want to bet their corporate brands by associating them with untried
products – unless the corporate brand,like Virgin’s, is associated with high-risk
ventures. Also, in industries like oil or chemicals where practices can raise
ethical concerns or companies face repeated crises or scandals, the downside
of corporate branding can be steep. Any negative publicity associated with
the company will spill over onto all the products it labels with its name or
associates with its official symbols.
When a Corporate Brand
Doesn’t Make Sense
