What Small Businesses Can Learn from Volkswagen

October 06, 2015

The recent emissions cheating scandal unfolding at Volkswagen serve as a powerful reminder of two important points:

1. A brand is powerful and valuable yet fragile if not looked after
2. A corporate culture that embraces branding is vital.

Having a healthy brand can be a powerful competitive advantage. Just ask the competitors of Apple, Amazon, IBM, Lego, L’Oreal, or Rolex if they’d like to have the trust and confidence and goodwill of these brands. A strong brand makes selling products faster and easier as branding and the marketing behind it, provide a promise of consistency, value and most importantly trust.

It takes years of steady hard work to really be known and respected for something. And perhaps it’s even harder to stand out in the crowd of competent peers. It took Volkswagen decades to build their brand and really differentiate themselves among the car brands and to a large degree a kind of lifestyle people want to identify themselves with. And that kind of distinction and difference is valuable. In fact, VW valued that goodwill (typically calculated as market value – hard assets) at $23 Billion in 2014. The actions of the company just destroyed a large portion of that value. The day the scandal was exposed, VW’s stock lost 34% of its value. And once gone, the reputation and value are hard to build back again as some consumers may be hesitant to trust while others don’t want to be associated with a brand that no longer reflects them. As Robert Hiscox is known to say, “Lose money and I will forgive you, but lose even a shred of reputation and I will be ruthless.”

The second point the VW debacle illustrates is that every employee impacts the brand and therefore has a responsibility to protect it. While the Marketing team may do more of the heavy lifting, it doesn’t do all it all. The actions of each employee, serve as the proof points and validation of the message our advertising and branding efforts convey. And the culture of the company plays a pivotal role in reinforcing this.

Had the people at VW placed an importance on the impact of their decisions to knowingly put the company’s reputation at risk they might have acted differently. Had VW’s corporate culture kept the concept of brand building being everyone’s job, not just marketing’s, someone may have put a stop to what VW ultimately did. Or the idea of installing cheating software would never have gained any traction inside the organization. The idea of ‘brand stewardship’- where every employee watches out for the brand, is a concept the very best companies have carefully, deliberately and continuously nurtured in their culture. A few companies have taken it a step further and have their employees take a marketing Hippocratic Oath, modelled after the pledge many marketing MBA students take leading up to graduation to first do no harm to the brand.

Regardless of your company’s size, start building your brand from day one. Make sure everyone who works for you understands and promotes the brand, not just the marketing department.

While the VW emissions scandal will most likely be remembered as a problem due to a failure of ethics, the more accurate depiction may be as a problem due to a failure of culture. Don’t leave the branding to the marketeers. Be a brand steward.

Russell Findlay is a 20-year marketing veteran and Head of Marketing for Hiscox USA.  He joined Hiscox at the end of 2013, following marketing roles at Pepsico, Unilever, IHOP and Major League Soccer.