Corporate makeovers can save or sink firms in trouble
Anglo Irish Bank would not be the first damaged company to attempt to rescue its tainted image with a rebrand, writes Ken Griffin
Published 25/07/2010 | 05:00
ONE of the most controversial rebranding exercises in Irish corporate history came to an abrupt and untimely end last week when Anglo Irish Bank's tender for brand consultants was cancelled just days after it was issued amid a wave of neg-ative publicity.
Much of the anger surrounded the fact that the nationalised bank, which looks set to ultimately receive over €22bn in State bailouts, decided to offer a blank cheque to potential applicants, safe in the knowledge that the taxpayer would pick up the tab.
The tender stated that brand consultants were required because the failed bank hoped to "concentrate on building a successful franchise as a mid-sized corporate and commercial bank" and break its association with the previous management team led by its now bankrupt former chairman Sean FitzPatrick.
According to Andrew Bradley, a partner at brand consultancy Bradley McGurk, revamping the firm's image would play a crucial part in that process. "Consumers are inherently sceptical about products and services, meaning that a company has to look its best so that it forms an emotional connection with potential customers," he said.
Unfortunately for Anglo, its brand has been destroyed in recent years following revelations about its lending practices, secret loans to FitzPatrick and manipulated accountants. FitzPatrick has become one of the bogeymen of Ireland, while former chief executive David Drumm fled to the US and faces questioning by the fraud squad if he ever returns here.
Given those events, another branding expert, Martin Crotty, the managing director of consultancy BFK, believes that the Anglo name is highly unlikely to survive any future rebranding. "It might work if they split into a good bank and a bad bank and relaunch the good bank with a clearly expressed purpose and a new set of values. But I would be more inclined to dump the brand and start again," he said.
Part of the problem with retaining the current Anglo brand is the fact that it has become so closely associated with Sean FitzPatrick, who actually gave the bank its current name in 1986. Its original name was Dublin City Bank.
Crotty argues that branding, despite popular perception, isn't a cosmetic exercise but one that has to involve a fundamental rethink of the underlying business to work. "It's not a sticking plaster solution. You have to make fundamental changes across the business if a brand is to be a success," he said.
As a result, it can be difficult to successfully reinvent a brand, particularly if the business involved has been tainted by scandal, as the following examples demonstrate.
Some brands are beyond redemption, particularly if there appears to be little commitment to change within the company. The British government's rebranding of Windscale nuclear power station as Sellafield in 1981 is a case in point.
The rebranding was essentially a cosmetic exercise, designed to break the link with the disastrous Windscale fire in October 1957, which remains western Europe's worst-ever nuclear accident, spreading radioactive contamination across a wide area.
It subsequently emerged that the incident was caused by flaws in the power station's basic design, causing irrep-arable damage to the Windscale brand.
But little changed after the introduction of the Sellafield name, with numerous incidents linked to lax safety procedures at the plant occurring since then. One of the most damaging came in 1999, when it was discovered that workers had been falsifying safety records at Sellafield's new £1.2bn MOX reprocessing plant.
According to Crotty, it is important the organisation rebranding itself makes significant improvements to the level of service it provides to customers to ensure the exercise's success. "Otherwise it's like blowing up a balloon by building up expectations and once it gets pricked, the brand never gets its initial momentum back," he said.
The rebranding of the State's health boards as the Health Service Executive is a classic example of this.
When launching the new identity, Health Minister Mary Harney promised that the unified organisation would bring improved patient care and be more accountable to the public. In reality, the HSE simply added another layer of unaccountable bureaucracy to the health system as witnessed by its recent attempts to suppress revelations about the scandalous state of its foster care services.
Even though the HSE has only been in existence for five years, Crotty believes that it has become a very damaged brand with a grim corporate identity. "I would venture to suggest that they need to revitalise the whole thing, starting with improving service levels and patient experience before changing its name and the corporate identity."
Meanwhile, Bradley argues that the most successful rebrandings involve companies which "have a bold idea that appeals to people and makes sense". Telecoms giant Worldcom's reinvention after its bankruptcy was particularly sensible, given that its collapse came amid revelations that it had overstated its earnings by an incredible $10.8bn in previous years.
Rather than attempt to defend the Worldcom brand, the company's new management turned to an older, untainted brand, MCI, which it acquired after taking over that company in 1997. The Worldcom brand was ditched in favour of MCI in an exer-cise which drew a line under the scandal.
Indeed, it even cleverly acknowledged that the whole Worldcom era had been a mistake by resurrecting MCI's old pre-merger logo.
This bold initiative paid off and MCI emerged from bankruptcy in 2004 with the new branding having successfully shed the baggage from its Worldcom period. The firm ultimately attracted a takeover offer from one of its rivals, Verizon, which bought it for €7.6bn in 2005.
Another example of corporate rebranding which appears to have achieved its aims, even if they were somewhat unconventional, was the rebranding of one of the world's biggest tobacco companies, Philip Morris, in 2003.
Crotty believes that there are certain situations where "it is easier to dump what has gone before". In the case of Philip Morris, decades of revelations about the link between smoking and lung cancer hit the company's reputation to such an extent that it decided to try to bury the name as part of its plan to construct a more socially responsible image.
It also appeared to want to reduce its corporate visibility, selecting the anonymous and meaningless Altria Group as its new name. It spun off its tobacco business into a separate subsidiary, which retained the Philip Morris name, so that the new identity was further insulated from its negative connotations. This tactic appears to have been effective, particularly as it can redirect tough questions about its involvement in tobacco to an apparently independently run subsidiary.
Irish Stock Exchange
Not every rebrand, however, represents an attempt to escape past misdeeds. All companies and organisations have to refresh their brands to ensure that they remain relevant in a rapidly changing marketplace.
"It's a form of capital investment. You don't do it every year but you do it every five or 10 years," explained Bradley.
Crotty, who was involved in the ISE's rebranding, said that the main aim was to project a more efficient and modern identity to its customers. "It's a business people don't think about as having competitors, but it trades internationally in the investment fund market," he said.
One of the most striking aspects of the exchange's rebranding is the replacement of the ISE's old crest symbol with a much simpler emblem.
But Crotty is keen to stress that branding involves far more than just simply changing a logo. "Creating a logo is not a brand. Branding involves a process of reflecting upon the direction of the business and its relationship with various stakeholders. The brand is ultimately a servant of the company's business strategy."