Brand Orientation vs. Market Orientation: When Great Brands Lose Themselves

The CEO of a brand I admire got on an earnings call recently and explained that their business had slowed because people were saying bad things about it, which had in turn led to negative commentary in the media, and noise on social. All of this, they said, was hurting traffic and hurting sales.

I'm sure the commentary didn't help, but I feel like this is an example of missing the forest for the trees.

To see why, you need to know there are two kinds of companies. Brand oriented companies, and market oriented companies. Whether or not they're aware of it, every company leans one way or the other.

Brand-Orientation vs. Market-Orientation

A brand-oriented company runs inside out.

It starts with who it is. It knows what it believes. It knows how to express it, and how it should be experienced. It protects that at almost any cost. Decisions get weighed against that identity first and foremost. When competing pressures bump up against one another, identity drives the conversation because there are systems in place that make it so.

A market-oriented company runs outside in.

The market sets the course. The company listens closely, responds quickly, and lets customer feedback decide what comes next. It's how a company stays useful, relevant, and keeps giving people more of what they actually want. These companies still have a brand but it doesn't act like a control system in the same way it does for brand-oriented companies.

Many companies, somewhere along their journey, end up becoming the second. Even if they were entirely built on the strength of their brand.

The Drift

To be sure, one kind of company isn't better than the other. Nor is the drift from brand-orientation to market-orientation necessarily a bad thing. It's just something that tends to happen as companies grow and scale. Above and beyond the drive for growth, it usually begins with well-intentioned efforts to listen to and understand what customers want – which is a smart thing to do.

No one ever stands up and says, "Let's stop being ourselves and start being whatever the market wants this quarter." But it does become a problem when the market ends up being the only voice that truly matters when it comes to the toughest decisions that are made.

Which brings me back to the brand in question.

The Backlash is a Symptom

This is a company that has unintentionally drifted away from the one thing that made its brand so strong in the first place: a clear sense of what it was, and what it wasn't.

Strong brands do a few things exceptionally well and guard the center. The drift begins when a few things, exceptionally gradually becomes everything, adequately. And then, the thing that made you worth choosing in the first place just kind of gets lost in the sauce.

It's a trap so many brands have fallen into over the years as they begin trusting cues from outside more than from themselves.

Brands as Viable Systems

Organizations are complex systems. And healthy systems are viable systems.

In any viable system there is a part whose job is to know who/what you are, and keep everything else on track. It's what ultimately allows that system to manage signals from the outside without losing the plot. Everything gets weighed against a stable sense of self by this part of the system.

Your body, for example, which is a biological system, manages to maintain a consistent internal temperature, despite fluctuations in the external environment. It's a viable, self-regulating system in the same way that a large organization is.

Without getting too deep into systems stuff, sensing the outside world and knowing who you are are two different functions. And what keeps things healthy and working properly is the relationship between those functions. There are two ways things can break down:

1. Not enough signal reaches the leaders of the organization, or;
2. The leaders of the organization develop an unhealthy relationship with signal

The latter is what I would argue is at the root of much of the negative commentary this brand has received, even if the voices expressing critique are saying something slightly different – that the brand has "lost its cool factor," circling the same wound from a worse angle, and for worse reasons.

Too Much Signal Can Make Everything Worse

Brands don't get to these places through neglect. They get there through effort. They feel the wobble, want to fix it, and then reach for tools that promise clarity.

I'm here to tell you this can be a mistake. Which is a strange thing for a company that sells research to warn you about. But here we are.

Brands facing difficulties commission a lot of research – sometimes to their detriment. Because the more you treat every decision as an externally-driven question, the easier it is for your identity to also become externally-oriented. Past a certain point, endless listening has you playing someone else's game rather than your own.

What's Selling vs. What's Coming

There is research that tells you what's selling, and then there is research that tells you what's coming.

The former maps present-day demand. The latter offers a perspective on what's changing and is often one of the first things nervous companies trim. And therein lies the trap. Wobbling brands tend to double-down on the first kind at the expense of the second.

Now you're no longer Wayne Gretzky skating to where the puck is going to be. You're chasing the game, and constantly one step behind. And no volume of "what's selling" research can save you.

The Brand as The Operating System

Brand-oriented companies still take in enormous amounts of signal, but the good ones have a healthy relationship with it. Because, listening and being led are not the same thing.

Every company has to do two things at once: run the business it has today, and build the one it'll need tomorrow. What's selling, and what's coming. The two pull against each other. Balancing them takes something sitting above both, deciding how much weight each one gets.

In a brand-oriented company, that something is the brand.

It's an operating system that provides you with a shared sense of who you are, that every decision runs on top of. It's what lets you listen to the present without being ruled by it, so you don't "lose your cool factor."

If you're the kind of company who has something about the continued strength of your brand in the risks section of your annual reporting, then every hard decision is a mini referendum on who you are.

The market will always have an opinion, and it's worth hearing. But rely on it too much and you may become a different kind of company than you set out to be. Most brands already have more than enough of what's selling. Don't forget to spend time on what's coming. It's a crucial part of keeping winning brands healthy.