GLOBAL MALAYSIAN BRANDS: TOWARDS THE NEXT DECADE
Assalamualaikum Warahmatullahi Wabarakatuh
Good morning to all of you.
Beta bersyukur ke hadrat ILAHI kerana dengan izin dari Nya juga Beta dapat berangkat untuk menzahirkan titah utama di Brand Entrepreneurs Conference 2010 pada pagi ini.
It is a pleasure to be here to address you all at this important conference. I am always happy to be able to exchange ideas with the business community, which I consider to be the real source of dynamism and competitiveness in this country. We all need, of course, innovative plans and practical policies to stimulate and facilitate economic activities. But these will be in vain if there are no Malaysian businessmen and women to benefit from them by creating income and wealth.
- When I spoke at this conference last year, the economic environment was still highly uncertain. We had seen companies that had existed for many years – some for well over a century – disappear from the scene literally overnight. We also saw brands that had taken billions of dollars, perhaps even hundreds of billions, to painstakingly build up, humbled. The more fortunate ones were taken over. The not-so-fortunate ones have either languished or disappeared altogether.
- I observed last year that merger and acquisition activity was reconfiguring the face of international business. A great deal of investment capital is now being poured into intellectual property, supply and distribution chains, and into brands and trademarks. I noted that with the increasing concentration of ownership of brands, competition would be more intense and brand building could be more difficult.
- My message this time around is that brand building can only really be successful when companies, that is, their owners, managers and workers have a strong sense of purpose and a clear set of values. Brand building essentially communicates a company’s character, character that is founded on such a purpose and values. As I see it, brands therefore originate from the vision that management has for the company and the success it has in translating that vision into mission, and that mission into accomplishment. Great values inspire great companies, and great companies produce great products.
- This is not to say that R&D and product innovation is not important. It is. Quality assurance is important. After-sales service is important. So are corporate social responsibility programmes. But brand building is more than the sum of these individual functions, more than even clever marketing and advertising. Turning brands into corporate wealth requires considerable investment and persistent efforts. And these are things best driven by passion born of higher-order purpose and principles.
- The best companies and brands are the ones that are not just associated with product quality and service. Their reputation rests to a large extent on the values and principles that they are perceived to represent. In short, consumers today do not just want products that are good, but also produced by companies that are good.
- Some of you might still find it a little strange to think of companies and products as having embedded values. The best example I can think of is Islamic financial products. Islamic securities are based on the non-exploitative, productive and stable principles of the shariah. Investors in these instruments, however, are not just Muslims. Increasingly, they include also non-Muslims who appreciate the principles underlying the instruments. Some companies show deep concern for the environment and market their products accordingly. Others practice fair trade policies towards the poor such as farmers, and their workers.
- It is not enough just to have core values; companies need to work continuously and strenuously to protect these values. I like what Charles Brymer, the Group Chief Executive of Interbrand, wrote in his article entitled ‘What Makes Brands Great’:
“If you are not willing to sacrifice your profits, if you are not willing to endure the pain of [your] core values, then you will not build a great company.”
As the old saying goes, ‘you have to put your money where your mouth is’. You have to act consistently and with integrity if you are to be credible.
- Let me illustrate this with a few examples. The poster child of all that was wrong in the 2008 global financial crisis was undoubtedly the investment banks that failed, like Lehman Brothers, or that had to be rescued at great cost to the taxpayer. They, along with their corporate executives, and the regulators and rating agencies that were supposed to oversee them, will be remembered for a long time to come, and not in a kindly way. I am sorry to say that they will be reviled and branded for their recklessness, immorality and greed.
- One of the greatest casualties of the crisis was the public’s trust and confidence in companies that were supposed to be the cornerstones of our economy. Brands play a very important role as a representational and communication tool. Many retail and also quite a few institutional investors did not have the interest or ability to investigate the underlying safety of the financial products being marketed. They relied instead on the good name and reputation of the banks concerned. They soon discovered that their trust in the brands was misplaced.
- But while big investment banks may have survived the crisis and will undoubtedly be big beneficiaries of the industry shakeout, theirs is not a complete victory. They remain profitable but their corporate reputations and brands have taken a beating. Owing to their perceived lack of judgement and moral failings, the public and governments are now demanding much tighter regulation and supervision.
- British Petroleum is another example where government action is being demanded. This company is struggling to contain an ecological calamity in the Gulf of Mexico caused by problems at one its offshore facilities. It has made a number of attempts to repair the facility and I sincerely hope the latest one will work. This unfortunate incident has not only damaged the habitat but has also put human lives and livelihoods at risk.
- Obviously, the incident is a major public relations disaster for the company. BP prides itself on helping the world meet its growing need for energy that is “affordable, secure and doesn’t damage the environment.” The company also states: “Brand is formed by every experience people have of us – from our logo to the quality of our products; from how our people behave to our profile in the media.”
- From public feedback, it would seem that BP has not succeeded to any great extent in portraying itself as conscientious and responsible. The accusations are that the company did not do enough to ensure that precautions were taken to prevent such an incident, that it was slow to take remedial actions, that it was insensitive and uncaring to those who were affected.
- We do not know if any of this is absolutely true. No doubt, there has been some exaggeration. But true or not, the fact remains that the company’s brand has been the subject of some ridicule. The incident has also adversely affected its share price.
- In both these examples, there is the widespread perception – and I must stress that it is a perception – that profits were put ahead of the public interest. In both cases, there is the feeling that the company’s interests, values and practices were at odds with those of society and this has caused the brand to suffer. We do not know the extent of the damage but it will probably take some time to fully recover, if at all.
- Contrast this with Toyota Motors, a brand that has been synonymous with quality and innovation. It has come under siege following highly publicised reports of a faulty accelerator pedal and braking system in its hybrid vehicle, the Prius. The company has been the subject of governmental investigation, fined and is facing more than two hundred lawsuits.
- For all of the company’s legal and financial troubles, however, Toyota remains the top-selling carmaker in the world and it outsells its rivals by a considerable margin. The company may not yet be out-of-the-woods but I think the indications point to a very quick recovery in market position and prestige. In the first half of 2010, the company’s overall sales were up by a strong 10 per cent and it retains its position as the top retail brand in the US.
- This, I think, powerfully exemplifies the value and power of the brand. In my opinion, the reason why there has been limited impact is that Toyota’s management has demonstrated a willingness to take responsibility and ownership of the problem and work towards its resolution in an open and genuine manner. It could perhaps have done better in managing the crisis, but there was obviously enough residual goodwill for consumers to give it the benefit of the doubt. I am sure that even now, some academic researcher is writing this up as a case study for management schools.
- Despite our best efforts, we may not always be able to avoid business crises and predicaments. Crises, however, cannot excuse questionable practices. Companies cannot shirk their responsibilities or engage in unethical practices during bad times if they want to maintain their corporate reputations and that of their brands.
- Creating successful brands requires us to ensure that good values underpin our brands, that is, we should adopt goals and practices that contribute to the betterment of society. We also need to preserve these brand values.
- How do we do this? One of the most famous examples of corporate vision is that of Konosuke Matsushita, the founder of Matsushita Electric Industrial Company, which is today known as Panasonic. He saw the purpose of his company as improving human welfare by eliminating poverty and working towards peace and prosperity. Mr Matsushita also declared that his company “manufactures people, and also electrical appliances and various other products”.
- ‘Manufacturing people’ is an unusual phrase to use to describe a company’s objective. What I think Mr. Matsushita meant was that people must always come first. It is people who are the real brand builders and the rest are consequences of this. Japanese corporations have, in fact, become famous for their highly motivated and disciplined workforce. They guard the quality and reputation of their companies and products with a fierce determination, which is why they have had such success.
- The best brands are the result of a great many inter-related factors, the most important of which has to do with people. Invest in great people and we can expect great products and brands to follow.
- We, in Malaysia, already have a number of brands that are making inroads into the global and regional marketplace. Petronas, Air Asia, CIMB, among others, are ones that we can be justly proud of. I am confident we will see more global Malaysian brands among the companies represented here this morning in the years ahead.
- I hope you will have a highly rewarding conference and go on to build the outstanding brands that Malaysia needs and deserves.