This piece is contributed by Mike Moran, former IBM Distinguished Engineer, senior strategist at Converseon, and instructor and lecturer at Rutgers Business School and the UVA Darden School of Business. @mikemoran
Don’t listen to people who say that branding is so twentieth century.
Brands serve a useful purpose — they signal value to buyers before they have purchased the product or service, because they believe they know what a brand stands for. Whether through advertising, content marketing, or word of mouth, customers use the brand name as a handle to hang all sorts of expectations of the value they will derive from their purchase.
But digital is fracturing the ways that we deliver brand value in ways that affect how we portray our brands, through dynamically-assembled value chains. You all know examples of these new kind of value chains–Uber and Airbnb are the two most famous. Instead of the brand “owning” all or most of the elements that deliver brand value, these newfangled brands own very little in comparison.
Hotels in recent years have differed in whether they own the land or even the actual buildings whose rooms they rent, but they all manage their people, whether contracted or employees. They have massive sets of procedures of delivering their service. They buy the supplies. They renovate the rooms and keep them clean. They centrally control the brand experience for the hotel guest.
Airbnb does very little of that. They control an app that prospective guests use to book a room. They provide a similar app for people who have rooms to rent. So how do they control the delivery of value as a brand such that they can compete with hotels?
- Programming interfaces. This is the essence of dynamically-assembled value chains. Airbnb uses software to connect the dots digitally rather than relying on massive vertical integration where they control delivery systems. In essence, they just provide an open booking system. That system is the linchpin of the brand experience that they directly control.
- Social reviews. Rather than massive standards, procedures, and employee training programs, social media polices quality, both for the room guest and the room owner. Bad reviews make it harder for either one to use the service again.