Author :- Deepa Prahalad is a strategy consultant and co-author (with Ravi Sawhney) of Predictable Magic: Unleash the Power of Design Strategy to Transform Your Business. Follow her on Twitter at @deepaprahalad.
We've all been taught that trust and reputation are important elements of branding. Today, though, trust is not simply a nice thing to have, but a critical strategic asset. Therefore, it makes sense to be specific about how and why it adds value. The drivers of brand value have changed over time, and there are three forces at play that have brought the issue of trust to the center stage:
If we look at company valuations, an increasing portion of a firm's value resides in intangibles. In The Brand Bubble, John Gerzema and Edward Lebar highlight the fact that in the 1950s, about 30% of firm value was intangible (at the high end); today it is closer to 62% globally.
Let's look at some of the components of intangible value. Gerzema and Lebar offer this construct:
Brand: Brands, trademarks, customer goodwill, company reputation
Market Position: Contracts, licenses, legal monopolies, customer lists
Business System: Organizational models, software investment, proprietary process, franchise rights
If we look at these from the perspective of trust, there is a really interesting pattern. The bottom two components, business system and knowledge — with items like R&D, patents, business systems and proprietary processes — really speak to how well companies are able to mobilize people and build trust inside the company.