Davis founder brands 091812

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Davis founder brands 091812

  1. 1. Founder Brands From Original Vision to Sustained ValueDavis Brand CapitalClarity. September 2012
  2. 2. What do some of the world’smost valuable and well-known brands have in common? Copyright © 2012 Davis Brand Capital 2
  3. 3. 3Copyright © 2012 Davis Brand Capital
  4. 4. They are all founder brands. Copyright © 2012 Davis Brand Capital 4
  5. 5. What does this mean? Copyright © 2012 Davis Brand Capital 5
  6. 6. A founder brand is most easily defined asa brand where a founder or foundingfamily exercises significant influence overthe business.Source: International Finance Corporation, “Corporate Governance,” 2007, p. 1 6 Copyright © 2012 Davis Brand Capital
  7. 7. That “influence” is manifested throughownership, effective voting control,management or history.Source: International Finance Corporation, “Corporate Governance,” 2007, p. 1 7 Copyright © 2012 Davis Brand Capital
  8. 8. Why do founder brands matter so much? Copyright © 2012 Davis Brand Capital 8
  9. 9. Founder brands make enormouscontributions to the U.S. economy. Copyright © 2012 Davis Brand Capital 9
  10. 10. 35 80+ more than 35 percent of Fortune 500companies are family owned or controlled 60 244 Source: Conway Center for Family Business, “Family Business Facts, Figures and Fun,” 2012 10 Copyright © 2012 Davis Brand Capital
  11. 11. 35 80+eighty to 90 percent of all U.S. businesses60 are family owned or controlled 244 Source: Conway Center for Family Business, “Family Business Facts, Figures and Fun,” 2012 11 Copyright © 2012 Davis Brand Capital
  12. 12. 60 244sixty percent of all public companies in the U.S. are family controlledSource: Conway Center for Family Business, “Family Business Facts, Figures and Fun,” 2012 12 Copyright © 2012 Davis Brand Capital
  13. 13. 60 244 the founder brands* on the2011 Davis Brand Capital 25 had a market capitalization exceeding $244 billion… * Apple, Microsoft, Google, Toyota Motor Corporation, Volkswagen, Samsung Electronics, Wal-Mart 13 Copyright © 2012 Davis Brand Capital
  14. 14. … and outperformed the S&P by 13.53 percent in 2011 DBC25 (+9.32%) FOUNDER BRANDS (+13.53%) DOW JONES (+5.53%) S&P 500 (0.00%) NASDAQ (-1.80%) 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% - 10 % - 12 % -14%JAN. 2011 ARPIL 2011 JULY 2011 OCT 2011 DEC 2011 JANUARY 9, 2011 – DECEMBER 30, 2011 Note: Based on a hypothetical stock portfolio comprised of the 25 companies on the Davis Brand Capital 25, with holdings proportionately allocated according to each company’s position in the ranking. Copyright © 2012 Davis Brand Capital
  15. 15. Surprisingly, even when family businesses grow into major brands, they are neither well understood nor well studied. Copyright © 2012 Davis Brand Capital 15
  16. 16. Think 16 Copyright © 2012 Davis Brand Capital
  17. 17. Founder brands are often the product of asupremely charismatic and motivated individual. Copyright © 2012 Davis Brand Capital 17
  18. 18. Consider 18 Copyright © 2012 Davis Brand Capital
  19. 19. The brand and the individualbecome one in the public’s mind. Copyright © 2012 Davis Brand Capital 19
  20. 20. Think 20 Copyright © 2012 Davis Brand Capital
  21. 21. Separating founder and brand to ensurethe brand’s growth and longevity is oneof the core issues founder brands face asthey grow. 21 Copyright © 2012 Davis Brand Capital
  22. 22. However,sometimes the founding influence gets eclipsed over time. Copyright © 2012 Davis Brand Capital 22
  23. 23. ConsiderWho would you name its greatest leader? Thomas Edison or Jack Welch? 23 Copyright © 2012 Davis Brand Capital
  24. 24. No matter the scenario,founder brands are unique brands … Copyright © 2012 Davis Brand Capital 24
  25. 25. … facing unique challenges andopportunities for growth – everyday. Copyright © 2012 Davis Brand Capital 25
  26. 26. Founder brands share five common challenges and opportunities … Copyright © 2012 Davis Brand Capital 26
  27. 27. 1.For founder brands, image and reputation are not abstract concepts. Copyright © 2012 Davis Brand Capital 27
  28. 28. Managing a personality-focused equity can be a major challenge and how a brand handles it, can be the difference betweenshort-term success and sustained value. Copyright © 2012 Davis Brand Capital 28
  29. 29. How to solve this conundrum? Copyright © 2012 Davis Brand Capital 29
  30. 30. For example, convey a brand promise that lives beyond a personality Steve Jobs effectively prepared the company and his successor,Tim Cook. Apple now is the world’s most valuable company, nominally. 30 Copyright © 2012 Davis Brand Capital
  31. 31. Or, define a higher ideal that both honors the legacy and shapes the future IBM has evolved into an iconic, global brand, honoring not itspowerful founder, but the more universal power of “thinking.” 31 Copyright © 2012 Davis Brand Capital
  32. 32. So, what will Martha Stewart do next? 32 Copyright © 2012 Davis Brand Capital
  33. 33. 2. Founder brands must consider that what is best for the brand may not be what is best for the founder. This is an essential consideration for keepingcompetitive position and consumer trust. Copyright © 2012 Davis Brand Capital 33
  34. 34. The road from founding garage tofounder brand is not always clear, nor free of potholes and u-turns. Copyright © 2012 Davis Brand Capital 34
  35. 35. Think Jerry Yang’s attempt to right the long-suffering Yahoo, the company he co-founded. The result?One of many executives dismissed by a board without a roadmap. 35 Copyright © 2012 Davis Brand Capital
  36. 36. ConsiderWall Street’s pressure on Mark Zuckerberg’s Facebook. The result? Too early to tell. 36 Copyright © 2012 Davis Brand Capital
  37. 37. 3. Founder brands often struggle with how best to manage and leveragepast achievements in a meaningful and future-focused way. Copyright © 2012 Davis Brand Capital 37
  38. 38. To protect the equity in thefounder brand, a portfolio strategy is essential to its longevity. Copyright © 2012 Davis Brand Capital 38
  39. 39. Allowing the brand to evolve … Hermes, contemporary artisans since 1837 39 Copyright © 2012 Davis Brand Capital
  40. 40. … and connect with a new generation ofcustomers with different needs and habits.petit h, a new Hermes collection, made from up-cycled studio scraps but with the same level of artisanship 40 Copyright © 2012 Davis Brand Capital
  41. 41. Founder brands also tend to undertakeinnovation with extreme due diligence,which can be a positive and a negative. Copyright © 2012 Davis Brand Capital 41
  42. 42. Case in PointKodak’s auction of intellectual property has yet to produce a sale. But it hashad one unlikely result: turning the fiercest rivals in the global patent battle intopotential collaborators.In recent days, the rival technology giants and patent-hoarding firms that had mountedcompeting bids for the portfolio have joined forces, people with knowledge of thenegotiations said – a move that could take the patents off the market at a price belowwhat Eastman Kodak Co. had hoped to raise in a competitive auction.The bidding group brings together a raft of strange bedfellows. It includes Apple Inc. andGoogle Inc., …Source: wsj.com, August 22, 2012 42 Copyright © 2012 Davis Brand Capital
  43. 43. 4.Founder brands are often synonymous with a strong company culture. Copyright © 2012 Davis Brand Capital 43
  44. 44. Founder brand cultures rise and may fallon the vision and spirit of those who brought them to life. Copyright © 2012 Davis Brand Capital 44
  45. 45. ConsiderSouthwest Airlines’ founder and chairman emeritus, Herb Kelleher He serves as an adviser and teaches in the company’s learning and development center. Southwest has also created a video archive featuring interviews with Kelleher and the company’s foundingemployees, “so people won’t lose that connection with the founder.” 45 Copyright © 2012 Davis Brand Capital
  46. 46. But, the intensity of founder brand cultures can end up creating insularenvironments and blind deference to the founder’s ideals as well. Copyright © 2012 Davis Brand Capital 46
  47. 47. Consider News Corporation’s phone hacking scandal It took a grieving mother and the government of theUnited Kingdom to expose what was likely clear to many on theinside: Murdoch and his children might not be the best choices to run the global media empire he had created. 47 Copyright © 2012 Davis Brand Capital
  48. 48. 5. Historically, founder brands excel atsocial responsibility and some have even spearheaded new notions. Copyright © 2012 Davis Brand Capital 48
  49. 49. Founder brands are in a particularly good position to extend the trusted relationships they enjoy with their customers. They can further cement their brand’s future success by institutionalizingthe implicit contract they entered with early supporters. Copyright © 2012 Davis Brand Capital 49
  50. 50. Think PatagoniaUnder founder Yvon Chouinard’s vision, Patagonia became one of the first B corporations. 50 Copyright © 2012 Davis Brand Capital
  51. 51. Consider ChipotleSteve Ells redefined fast food and introduced the notion of “food with integrity.” 51 Copyright © 2012 Davis Brand Capital
  52. 52. Think The Bill & Melinda Gates FoundationWhile separate from Microsoft, the Foundation reveals the Gates mind at work in familiar ways: finding and deploying solutions to global needs. 52 Copyright © 2012 Davis Brand Capital
  53. 53. Taken together… Copyright © 2012 Davis Brand Capital 53
  54. 54. Founder brands are subject tounique opportunities and challenges throughout their lifetime. To manage them for full value, a keen understanding oftheir particular nature is paramount. Copyright © 2012 Davis Brand Capital 54
  55. 55. For ongoing updates and perspectives on founder brands, follow: #founderbrands on Twitter #FounderBrands on Unbound Edition Or, request a copy of the white paper: founderbrands@davisbrandcapital.com Copyright © 2012 Davis Brand Capital 55

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