Being the Brand: The Pros and Cons of CEOs as Corporate Icons
KFC (YUM) is a classic example of a business that survived well past its founder's retirement or demise. "The Colonel" also broke ground for other business leaders who have made their identities an iconic part of their company's brand. Current examples include Hugh Hefner's Playboy Enterprises (PLA), the New York Yankees under the late George Steinbrenner and Steve Jobs with Apple (AAPL). But such marketing can be risky.
Icon or Liability?
"David Ogvilvy, the famous advertiser...said you had to be desperate to use your CEO as a spokesperson," notes Daniel Baack, professor at the University of Denver's Daniels College of Business and a brand management consultant. "So there's always been debate back and forth. During the recent crisis at GM they did a series of advertisements with the new CEO [Ed Whitacre] as spokesperson, trying to establish trust and authenticity."
The polar opposite of GM's decision, says Baack, could be the way BP (BP) CEO Tony Hayward became a public punching bag following his company's massive oil spill in the Gulf of Mexico. "In many cases, large firms try not to present their CEOs as the face of a company because of the risk involved," he notes. "During the recent Toyota problems, a lot of my students were astonished that the head of Toyota was called Toyoda [Akio Toyoda is the grandson of the company's founder]. They didn't even know it was a family name or a family-owned business."
According to the North Carolina-based Family Business Institute, an estimated 85% of business founders believe their children will take over the reins once they retire or die -- when in reality only about one-third of family businesses transition through the next generation.
"That's a pretty big disconnect," says Institute President Wayne Rivers, who believes most companies are destined to fail if they don't think strategically about life beyond their founders. "They say, 'this is what made us successful under John Doe, therefore to continue to be successful in the future all we need to do is to find another John Doe,'" he says. "That doesn't work well because it takes a different kind of leader to sustain a business and manage a business than it took to get the business off the ground initially."
While the founders of successful businesses are rarely replaced by just one person, fewer companies allow one individual to represent their brand. This is especially true with constantly morphing, multinational corporations -- where mergers, acquisitions, complicated marketing structures and brand portfolios make it difficult for a CEO to accurately portray a diverse company's image.
The exceptions are business figures with personas that match their company's overall product. Hugh Hefner, says University of Denver's Baack, is a classic example, "Look at Hefner's lifestyle, look at the image he presents and looks how well that fits with the product they're trying to sell," he says. "Same with Steve Jobs, [the] same sort of image as a cool computer guy. [Microsoft (MSFT) founder] Bill Gates is the computer nerd. I laugh at [Apple's] 'I'm a PC, I'm a Mac' commercials, because I feel like some ad guy said 'let's get somebody who looks like a fat Bill Gates, and somebody who looks like an even cooler version of Steve Jobs, and we'll make those our brand characters.'"
All in the Family
Such structured, expensive and detailed branding is often out of reach for America's 20 million or so family-owned companies and businesses. "The founder may be wonderful at getting new customers or opening new doors via informal public relations, country club memberships or church activities," says Rivers. "But in terms of branding, it's a marketing strategy and requires a lot of time and money."
Rivers says he's spoken with thousands of family-business owners over the years, and he always asks the same question: What do you have too little of? "And the No. 1 answer, the universal answer, is time," he says. "That's why they don't plan. That's why they don't create elegant ownership or management succession plans that work. That's why they don't survive. They manage their operations and projects. . .and they know how to get the day-to-day stuff done. But when it comes to time, to the long-term, sweeping strategic issues, they very rarely have the tools [needed] in those areas."