While many traditional CFOs see brand building as 'fluffy' and separate from finance, digital-first and innovative companies understand that a strong brand drives enterprise value, and the key to successful brand development lies in involving the entire C-suite, including CFOs
Ask a traditional CFO what drives growth and value in their business and where they are most likely to invest, and they will typically talk about product, property, sales, digital builds and other “rational” items. The word brand rarely comes up.
Within digital-first and innovative companies that has changed – they understand that a strong brand drives enterprise value – but there are still too many businesses where the brand and finance functions remain utterly siloed and suspicious of each other.
The fault lies on both sides and the tired old tropes live on: brand is seen as “fluffy” and an “expense” by cynical CFOs. Branding and marketing people can fail to see CFOs as having a role to play in the creative, brand-building process. That’s an insult to both functions, driving frustration and worse.
Ask any seasoned brand development professional and they will tell you that during the key consultative stages in building a successful brand, the inputs that come from supposedly “non creative” functions within a business can often be the most interesting, the most left-field and the most ambitious.
A brand created in an echo chamber solely by people perceived as creative is a recipe for disaster. Get the whole of the C-suite involved and the result is a valuable, rounded view with buy in and validation baked in.
So how best to put CFOs at the heart of the brand development process? To start with, stop everyone in the business – including the CFO – thinking in terms of creative and non-creative people. Then change the context within which brand is seen, using the language of finance and business to explain its role.
That script might go a bit like this: “Building a brand is not about making things look pretty; brand should be used as a lens through which a business makes commercial decisions around positioning, personality and purpose in the marketplace, which done well, will drive revenue and enterprise value.”
Going a bit deeper, by allowing the CFO to see how brand can drive differentiation and therefore unlock new markets, new consumers and new product development, or migrate into a premium positioning and so command a higher price point to drive profit, you get your eureka moment.
The CFO arrives as a moment of clarity and realises that a brand that is re-energised with a new purpose and direction can unlock commercial decision making. Seen in this context, the more alien concepts – to a CFO that is – such as the narratives deployed to recruit consumers and then drive meaningful, long-lasting relationships to retain consumers start to make sense.
This is then driving customer value. And most importantly of all, the CFO sees how they can apply their view of the future and factor it into the brand building process.
In this situation, where it has been made clear from the outset that the process isn’t about “look and feel” but entirely focused on brand building for enterprise value – with concrete measurements that the CFO can identify with and see how to impact – then the person who emerges most energised and the most vocal advocate of the approach is almost always the CFO, even if they started off as the most cynical.
Not only that, they feel liberated by spending a day discussing things that they wouldn’t usually explore, surprised to find they understand and enjoy talking about topics like brand values, brand principles and brand difference.
It is a safe space they would normally be siloed from, but by going on the journey, they can see that brand design, done well, makes the intangible, tangible and truly understand the connection between creative and financial value.
When the process is done properly, they learn that brands can be designed upfront and there is nothing accidental about them and more importantly they can be a powerful lever to drive profits and growth and increase the multiple. When a sale takes place, brand value accounts for 40%* of the market capitalisation of a services brand – for products/goods, it stands at 20% – so why wouldn’t you purposefully design this in at the front end?
To conclude, an organisation whose CFO is not currently involved in brand building decisions needs to rethink how it views the role. An ability to make the right financial and strategic calls depends on a holistic understanding of the business and its competition, and understanding brand mechanics should be part of that.
Equally, the day-to-day guardians of brand, whether they be internal or external, need to support the CFO on the learning journey by placing brand in a familiar financial and operational context. That said it is also down to old school CFOs to drop the cynicism, their comfortable silo and venture into a new conceptual world with an open mind. Anyone who’s smart enough to do finance is smart enough to understand the principles of brand building.
