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When brands become too powerful

May 6, 2010

In recent weeks, we’ve witnessed the spectacle of the world’s most powerful bank being dragged before the US senate to answer questions of allegedly in-appropriate business behavior.

The brand had reached a point where its very power threatened it. While others suffered, Goldman prospered and its bankers became the target of everyone who hadn’t been so fortunate. Goldman had multiple chances to show humility and to transform itself into something more transparent and balanced, but it took government action and public humiliation for the bank to take a long hard look at itself.

While business leaders and brand experts love powerful brands, their very power can threaten their core. It would be smart if every strong brand was big enough to realize that humility goes a long way these days and every bound forward needs to be balanced with a measure of humbleness.

UK grocery chain Tesco has been in superpower position for many years, as it’s expanded geographically and into other business areas, it has been the subject of serious scrutiny. The brand has simply got too powerful and is at a point where it has to be careful with every action it takes. While it’s shareholders and business leaders want the brand to become even more powerful, this power seems to have its limits.

As Tesco continues to expand into all four corners of the UK, it’s meeting pockets of resistance from local governments who are making serious demands in return for the brand’s continued expansion. These financially constrained local governments want some of Tesco cash reserves to fund housing, a move which is forcing Tesco into a business that it never intended to be in, homes.

While this news is fodder for any brand wizard wanting to show the amazing elasticity of power brands, it’s something of a problem for Tesco, as it confirms their status of all conquering power.

However, perhaps there’s a way that Tesco could turn this unintended consequence into a positive?

What if it was to create a foundation to facilitate the house building process and do it any way that pushed the boundaries on sustainability and provided homes at a low cost to those in need?

What if it could find a way to contribute something meaningful to society, like a new concept of community and do this through its foundation?

Tesco executives might be wise to read Fordlandia, the story of Henry Ford’s attempt to create a perfect mid-western style company town in the middle of the Amazon.

While on paper, it looks like another example of corporate imperialism, dig deeper and you find Henry Ford wanted world class medical care and the best living standards for his workers, but more than that, he wanted community.

There’s nothing wrong with powerful brands, but at some point, they all have to realize that humility and giving back are the only ways to stop them toppling over thanks to their own arrogance.

Posted by Ed Cotton

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