Hindustan Times (Gurugram)

The decline, and revival, of a brand

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

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

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.

 ?? SHUTTERSTO­CK ?? The CEO must know the art of managing contradict­ions and be aware of brewing obstacles requiring resolution
SHUTTERSTO­CK The CEO must know the art of managing contradict­ions and be aware of brewing obstacles requiring resolution
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